Economy
FG Projects 4.2% GDP Growth, 13% Inflation Rate in 2022
By Adedapo Adesanya
The federal government has projected a rise of 4.2 per cent in the country’s Gross Domestic Product (GDP) in 2022 and a decline in the inflation rate to 13 per cent.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, gave these projections at the public consultation on the Draft 2022 to 2024 Medium Term Fiscal Framework and Fiscal Strategy Paper (MTFF/FSP) on Thursday.
Mrs Ahmed said the GDP projected in 2021, to close at three per cent, had been adjusted downwards to close at 2.5 per cent.
“In 2022, we are expecting an uptake to 4.2 per cent, then a dip to 2.3 per cent in 2023 and up to 3.3 per cent in 2024,” she said.
The Minister further said the nominal GDP projected for 2022 is N184.38 trillion, up from N168.6 trillion in 2021, and then to N201 trillion in 2023 and N222 trillion in 2024.
She also said the inflation rate is expected to drop slightly to 13 per cent in 2022 from 15 per cent in 2021, noting that the increase in inflation was due to the exchange rate.
“Inflation rate, which was planned for 11.95 per cent in 2021, has been reflected in reality because the exchange rate is high. The average we have so far is 15 per cent.
“We are expecting 2022 to go down slightly to 13 per cent, then 11 per cent in 2023 and 10 per cent in 2024,” Mrs Ahmed stated.
She, however, said the federal government has put the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) rate of N410.15 to one US dollar for 2022 to 2024.
“The exchange rate of the Naira to the dollar, which was N379 in the 2021 budget, has been adjusted to the NAFEX rate of N410.15 to one US dollar.
“We are assuming, for now, the same rate for 2022, 2023 and 2024,” the Minister added.
Furthermore, the Finance Minister took an overview of the federation and fiscal outcomes for the Federation and Value Added Tax (VAT) Pool Accounts Distributable for January to May.
She said the amount available for distribution from the Federation Account was N2.78 trillion.
“Of this amount, the federal government received N998.57 billion, while the states and local governments received N506.59 billion and N390.48 billion respectively from the main pool account.
“Federal, state and local governments received N132.70 billion, N442.33 billion and N309.63 billion respectively from the VAT pool account,” Mrs Ahmed disclosed.
Also, the Minister said the gross oil and gas revenue was projected at N5.19 trillion for January to May.
“As of May, N1.49 trillion was realised out of the prorated sum of N2.16 trillion. This represents 69 per cent performance.
“Oil and gas deductions were N194.31 billion (or 45.8 per cent) more than the budget.
“This is mainly attributable to petroleum subsidy costs which were not provided for in the 2021 budget.
“After netting out deductions (including 13 per cent derivation) net oil and gas revenue inflows to the Federation Account amounted to N872.16 billion,” she said.
The Minister noted that the inflow was N864.20 billion or 49.8 per cent less than the projection as of May.
Giving an update on the revenue performance of 2021 budget implementation for January to May, Mrs Ahmed said the federal government’s retained revenue was N1.84 trillion, 67 per cent of the pro-rata target.
She said the share of oil revenues was N289.61 billion, which represented 50 per cent performance, adding that non-oil tax revenues totalled N618.76 trillion, 99.7 per cent of pro-rata.
“Companies Income Tax (CIT) and VAT collections were ahead of the budget targets with N290.90 billion and N123.85 billion, representing 102 per cent and 125 per cent respectively of the pro-rata targets for the period.
“Customs collections was N204.0 billion (86 per cent of target),” she said, noting that other revenues amounted to N762.70 billion, of which independent revenues were N487.01 billion.
On the expenditure side, the Minister said N4.86 trillion, representing 92.7 per cent of the prorated budget had been spent, stating that, “This excludes GOEs’ and project-tied debt expenditures.”
She noted that out of the expenditure, N1.80 trillion was for debt service representing 37 per cent of the federal government’s expenditure and N1.50 trillion for personnel costs, including Pensions, representing 31 per cent of the federal government’s revenues.
The Minister further said that as of May, N973.13 billion had been released for capital expenditure.
By Adedapo Adesanya
Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.
The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.
Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.
The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.
Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.
During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.
InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market was up on Friday on increasing expectations the US Federal Reserve will cut interest rates next week, which could boost economic growth and energy demand.
Brent futures rose by 49 cents or 0.8 per cent to $63.75 per barrel and the US West Texas Intermediate (WTI) futures expanded by 41 cents or 0.7 per cent to $60.08 per barrel.
Investors digested a US inflation report and recalibrated expectations for the Federal Reserve to reduce rates at its December 9-10 meeting.
US consumer spending increased moderately in September after three straight months of solid gains, suggesting a loss of momentum in the economy at the end of the third quarter as a lackluster labor market and the rising cost of living curbed demand.
Traders have been pricing in an 87 per cent chance that the US central bank will lower borrowing costs by 25 basis points next week, according to CME Group’s FedWatch Tool.
Investors also focused on news from Russia and Venezuela to determine whether oil supplies from the two sanctioned members of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will increase or decrease in the future.
The failure of US talks in Moscow to achieve any significant breakthrough over the war in Ukraine has helped to boost oil prices so far this week.
A loss of Venezuelan oil production in case of a US military intervention will materially impact global benchmark prices as the market will have to replace Venezuela’s heavy crude.
Venezuela is estimated to pump about 1.1 million barrels per day of crude oil at present, so if the US-Venezuela tension escalation into an invasion in the South American country, this volume of crude would be at risk.
Reuters reported that the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban in a bid to reduce the oil revenue that helps finance Russia’s war in Ukraine.
Any deal that could lift sanctions on Russia, the world’s second-biggest crude producer after the US, could increase the amount of oil available to global markets, weakening prices.
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