$30b Loan: IMF, World Bank Pressure Buhari For Economic Blueprint
By Modupe Gbadeyanka
President Muhammadu Buhari has been told come up with an economic blueprint as he seeks to borrow money to reflate the Nigerian economy, which is still in recession.
Recently, Mr Buhari wrote the National Assembly, seeking their approval to borrow $29.96 billion from the World Bank and the International Monetary Fund (IMF).
This is presently generating mixed reactions from Nigerians, who do not understand why the Federal Government wants to embark on such when the government had claimed in the past that it has recovered huge amount of money allegedly looted by the immediate past administration of Goodluck Jonathan.
But the latest report is that both the World Bank and the IMF are pilling pressure on Mr Buhari to come up with an economic blueprint, if its drive for foreign loans was not to be stalled.
Vanguard gathered that officials of both financial institutions have questioned the Minister of Finance and her team over the absence of a blueprint for which the loans being sought would be utilised.
Sources at the Presidency said at the last IMF/World Bank Group Annual Meetings, that the Nigeria team was asked to produce an economic blueprint for which the IMF/World Bank Group will offer support.
Specifically, Vanguard learned that the US Secretary of Finance and that of the United Kingdom, told the Nigerian team that without a comprehensive economic blueprint, Nigeria would not get support from IMF and the World Bank.
The source said that usually, the IMF asks countries for what it called Policy Support Instrument (PSI), an instrument which serves as a document through which the multilateral institution monitors the economic progress of the country they support.
The source further said that during the Obasanjo administration, the NEEDS document was the Policy Support Instrument used to negotiate debt relief. The source also said the World Bank Group was interested in such a document as a means of evaluating its recently launched Sustainable Development Goals.
It was also learned that at the various road shows in London, foreign investors had asked Nigerians for an economic blueprint. Such an economic framework, they argued, aside from addressing the current challenges, would go a long way to engender confidence in both local and international investors on the way forward.
The source said this had become very imperative, given that investor-perception of Nigeria’s outlook was critical to its economic recovery.
At the moment, the Federal Government has not been able to come up with such a policy document.
But in reaction to Vanguard’s enquiry a presidential aide said the present administration was working on a comprehensive economic blueprint that would soon be ready for launching.
The source, who said the issue of economic blueprint had become very contentious in government circles, said the economic management team had produced a blue print that will be launched soon. Stressing the need for an economic blueprint last week, Dr Obadiah Mailafia, a former deputy governor of the Central Bank of Nigeria (CBN), advised the Federal Government to produce a comprehensive economic blueprint to fast track economic growth and development.
Mr Mailafia gave the advice while speaking as a guest lecturer at the Federal Radio Corporation of Nigeria, FRCN, 2016 Annual Lecture in Abuja.
In the lecture, entitled Fighting Corruption and Growing a Sustainable Nigerian Economy, Mr Mailafia appealed to President Muhammadu Buhari to listen to the right advice that would help fix the nation’s economy within a short time.
“Nigerians are getting impatient and they are complaining that this change is not translating into what they are hoping for.
“We must do what we have to do to rescue our economy and to get the great Nigerian people back to work,” Mr Mailafai said.
He also advised the government to create an entrepreneurial state by encouraging innovation and generating critical public goods that would support creativity and high level productivity.
Besides, he urged government to pursue economic policies within the framework of a coherent and credible development strategy, with a greater coordination between fiscal and monetary authorities.
He said: “Sadly, we noticed that Nigeria does not have an economic administration. The British Chancellor of the Exchequer, for example, has at his beck and call some 300 highly well-trained economists in the Treasury.
“Their job is to worry day and night about the economy, monitor key trends, analyse critical developments and proffer policy. We need to build such an administration, in addition to strengthening the National Economic Management Team that has become virtually comatose.
“We cannot continue to blame previous administrations.
“We can only hope like the great Franklin Roosevelt in America of the 1930s and like Barack Obama during the height of the Great Recession.
“Our President needs a brains trust of people who love Nigeria passionately and are ready to do what it takes to take us to the path that destiny has ordained for us,” the ex-CBN deputy governor said.
Debt Management Office (DMO), which is charged with the responsibility of borrowing on behalf of government, had said in its Debt sustainability report for 2016 “There is an urgent need for the Government to formulate an Economic Blueprint or Road-Map for the medium-term.
“Aside from addressing the current challenges, it would go a long way to engender confidence in both local and international investors on the way forward. This has become very imperative, given that investor-perception of a country’s outlook is critical to its economic recovery.
“It is advisable that the Federal Government sustains the on-going reforms and initiatives in the various key sectors of the economy, including agriculture, education, housing, power, and transportation, as this would foster the needed inclusive economic growth and development.
“The passage of the Petroleum Industry Bill (PIB) by the National Assembly is long overdue and should be given speedy attention by the authorities.
“Its passage is expected to liberalise the oil and gas sector, and thus, attract more investments into the sector, which will have positive multiplier effect on the economy. Given that in the short to medium-term, oil would still remain a key revenue earner of the nation, the Federal Government is encouraged to continue on its efforts to curtail crude oil production disruptions in the oil producing areas.
“In view of the country’s huge infrastructure requirements, the Federal Government is enjoined to creatively explore other alternative and viable sources of financing critical infrastructure development outside the routine budgetary process.
“These may include the setting up of an Infrastructure Development Fund, the issuance of Infrastructure-tied Bonds, as well as encouragement for the private sector to participate in funding viable infrastructural projects through Public-Private-Partnership arrangements.
“As part of the initiatives for boosting revenue, the Federal Government is encouraged to fast-track the process of liberalising the exploration of the solid minerals deposits across the country. This is to make the sector much more attractive and competitive, and further expand the non-oil revenue base.
“As part of government’s commitment to encouraging private sector participation in the development of the economy, the demand for FGN Guarantees may likely increase. In order to instil discipline and discourage frivolous requests that may unduly expose the Federal Government, it is also recommended that the issuance of FGN Guarantees to the private sector should attract appropriate fees, and should be within an established framework.”
Former President Olusegun Obasanjo weekend also kicked against the plan by the Federal Government to obtain a $29.96 billion foreign loan.
Mr Obasanjo was said to have phoned the Minister of Finance, Mrs Kemi Adeosun, shortly after the media reported the loan bid, which the Federal Government explained would be used to finance critical infrastructure deficiency between now and 2018.
But the Finance Minister, it was learned, told an alarmed Mr Obasanjo that she would pay him a visit to explain the rationale for the plan, which had triggered mixed reactions on the necessity or otherwise of such loan.
The former president, it was gathered, spoke on the proposed foreign loan when he received members of a political association, The National Patriots’ Movement of Nigeria (NPMN), led by the national coordinator, Chief Dosu Oladipo, at his Hilltop residence in Abeokuta, the Ogun State capital, on Friday.
Mr Obasanjo, it was learned, not only opposed the loan bid, but also threatened to draw a battle line with the Federal Government should it go ahead to obtain the loan which he said could have far-reaching negative effects on the nation.
While some experts have advised the government to deploy part of the funds reportedly recovered from allegedly corrupt politicians in the last political dispensation to such purpose, others claimed the loan could be raised internally.
It will be recalled that the Mr Obasanjo led administration had successful negotiated with Western nations to write off $12.5 billion foreign debt to the Paris Club, a body of European creditors during his tenure.
However in justifying the proposal for the N29.96 billion external loan, President Muhammadu Buhari, had in a letter to the National Assembly said, “The total cost of the projects and programmes under the borrowing (plan) is $29.96 billion made up of proposed projects and programmes loan of $11.274 billion, special national infrastructure projects, $10.686 billion, Euro bonds of $4.5 billion and Federal Government budget support of $3.5 billion.”
But Nigeria’s foreign reserves have dipped lately, ostensibly owing to economic recession and intense pressure on Nigeria’s naira as a result of the scarcity of United States dollars.
FAAC Allocation to FG, States, LGs in March Shrinks to N722.7bn
By Aduragbemi Omiyale
The amount shared to the three tiers of government, the federal government, state governments, and local governments, by the Federation Account Allocation Committee (FAAC), decreased in March 2023 from the money distributed in February.
A communique issued on Wednesday after the FAAC meeting in Abuja disclosed that N722.7 billion was disbursed from the revenue generated by the country last month compared with the N750.2 billion shared in February.
A breakdown showed that the total distributable revenue of N722.677 billion comprised distributable statutory revenue of N366.800 billion, distributable Value Added Tax (VAT) revenue of N224.232 billion, Electronic Money Transfer Levy (EMTL) of N11.645 billion and N120.000 billion Augmentation from Forex Equalisation Account.
In the disclosure signed by the Director of Press and Public Relations of the Office of the Account-General of the Federation (OAGF), Mr Bawa Mokwa, it was disclosed that in February, Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Oil and Gas Royalties, Import and Excise Duties all decreased significantly while Value Added Tax (VAT) and Electronic Money Transfer Levy (EMTL) decreased marginally.
Explaining how the money was disbursed, FAAC said from the N722.677 billion, the federal government received N269.063 billion, the state governments got N236.464 billion, and the local councils were given N173.936 billion, while N43.214 billion was shared to the oil-producing states as 13 per cent derivation revenue.
Further, from the N366.800 billion distributable statutory revenue, the federal government received N178.683 billion, the state governments received N90.630 billion, and the local government councils received N69.872 billion, with relevant states getting N27.614 billion as 13 per cent derivation revenue.
In addition, from the distributable N224.232 billion from VAT, the federal government received N33.635 billion, the state governments received N112.116 billion, and the local councils received N78.481 billion.
The statement also said N11.645 billion Electronic Money Transfer Levy (EMTL) was distributed as follows: the Federal Government received N1.747 billion, the State Governments received N5.822 billion, and the Local Government Councils received N4.076 billion.
From the N120.000 billion Augmentation, the Federal Government received N54.998 billion, the State Governments received N27.896 billion, the Local Government Councils received N21.506 billion, and a total sum of N15.600 billion was shared to the relevant States as 13 per cent of mineral revenue.
In February 2023, the total deductions for the cost of the collection were N27.449 billion, and total deductions for transfers, savings, recoveries and refunds were N109.909 billion, while the balance in the Excess Crude Account (ECA) was $473,754.57, the same amount it had remained since December 2022.
Local Stock Exchange Extends Growth by 0.06% Amid Weak Sentiment
By Dipo Olowookere
Investor sentiment at the Nigerian Exchange (NGX) Limited was weak on Wednesday as traders chew over the decision of the Central Bank of Nigeria (CBN) to raise the Monetary Policy Rate (MPR) by 0.50 per cent to 18.00 per cent.
However, the local stock exchange closed higher by 0.06 per cent, buoyed by the 0.08 per cent growth reported by the insurance sector.
Business Post reports that the consumer goods space lost 0.02 per cent, the banking and the industrial goods counters depreciated by 0.01 per cent each, as the energy index remained flat.
When the market closed for the session, the All-Share Index (ASI) improved by 31.43 points to 54,936.11 points from 54,904.68 points, while the market capitalisation went up by N19 billion to N29.928 trillion from N29.909 trillion.
Analysis of the market data showed that the growth posted yesterday was fragile as the highest price gainer, Coronation Insurance, appreciated by 2.44 per cent to 42 Kobo, GTCO also rose by 2.44 per cent to N25.20, Linkage Assurance grew by 2.22 per cent to 46 Kobo, Lasaco Assurance jumped by 2.04 per cent to N1.00, and Transcorp grew by 1.56 per cent to N1.30.
On the flip side, NCR Nigeria suffered the heaviest loss after its value went down by 9.69 per cent to N2.61, FTN Cocoa depreciated by 6.90 per cent to 27 Kobo, Japaul lost 6.67 per cent to quote at 28 Kobo, Cutix declined by 4.95 per cent to N2.11, and Consolidated Hallmark Insurance decreased by 4.62 per cent to 62 Kobo.
Yesterday, investors transacted 134.2 million stocks worth N1.3 billion in 2,479 deals compared with the 127.7 million stocks worth N1.6 billion traded in 2,987 deals, representing an increase in the trading volume by 5.09 per cent, a decline in the trading value by 18.75 per cent, and a shortfall in the number of deals by 17.01 per cent.
The most traded stock on Wednesday was Transcorp with the sale of 28.1 million units, UBA exchanged 21.2 million units, Courteville sold 19.1 million units, GTCO transacted 13.6 million units, and FBN Holdings traded 8.1 million units.
FrieslandCampina Lifts NASD OTC Market by 0.07% at Midweek
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange returned to positive territory after back-to-back losses, following a 0.07 per cent appreciation on Wednesday, March 22.
This was influenced by the 96 Kobo gain reported by FrieslandCampina Wamco Nigeria Plc during the session to settle at N75.41 per share compared with N75.01 per share of the preceding session.
The improvement in the share price of the milk maker pushed the value of the unlisted securities market by N710 million to N961.17 billion from N960.46 billion, while the NASD Unlisted Securities Index (NSI) grew by 0.54 points to wrap the session at 731.48 points compared with the 730.94 points of the previous session.
The level of activity witnessed a significant increase yesterday as the volume of securities closed higher by 274,515.6 per cent to 23.1 million units from the 8,408 units transacted in the previous trading day.
Equally, the value of shares traded at the session jumped to N10.1 million, which by evaluation is 814.0 per cent higher than the N1.1 million posted on Tuesday.
These transactions were carried out in 13 deals compared with the three deals executed in the previous trading day, indicating a 333.3 per cent appreciation.
At the close of business, Geo-Fluids Plc remained the most traded stock by volume on a year-to-date basis with the sale of 455.3 million units valued at N493.6 million, UBN Property Plc stood in second place with a turnover of 365.8 units worth N309.5 million, while IGI Plc was in third place with a turnover of 71.1 million units valued at N5.1 million.
On the flip side, VFD Group Plc was the most traded stock by value on a year-to-date basis with a turnover of 7.3 million units worth N1.7 billion, Geo-Fluids Plc followed with the sale of 455.3 million units worth N493.6 million, while UBN Property Plc was in third place with a turnover of 365.8 million units valued at N309.5 million.
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