Economy
DMO Sets Limit For FG’s Borrowing Plan in 2017
By Modupe Gbadeyanka
The Debt Management Office (DMO) has fixed the maximum limit of loan amount, both domestic and external, the federal government could contract in the fiscal year 2017 at $22.08 billion (about N6.4 trillion), ThisDay is reporting.
According to the office, for 2017, new domestic borrowing has been pegged at $5.52 billion (about N1.6 trillion); and, new external Borrowing: $16.56 billion (about N4.8 trillion).
This limit is part of the key policy recommendations of the 2016 Debt Sustainability Analysis exercise conducted by DMO, the report of which was obtained by THISDAY.
The report titled, 2016 Report of the Annual National Debt Sustainability Analysis, explained that, “the end-period net present value (NPV) of total public debt-to-GDP ratio for 2016 for the federal government is projected at 13.5 per cent and given the country-specific threshold of 19.39 per cent for NPV of total public debt-to-GDP ratio (up to 2017), the borrowing space available is 5.89 per cent of the estimated GDP of $374.95 billion for 2017.”
As a result of this, DMO put the maximum amount that could be borrowed (domestic and external) by the federal government in 2017 ‘without violating the country-specific threshold’ at $22.08 billion, representing. 5.89 per cent of the GDP.
The office noted that these amounts were recommended maximum that could be borrowed, “taking into account the absorptive capacity of the domestic debt market, and the options available in the external market.”
It expected that “such external borrowings, which would be long-term (minimum 15 years), would be strategically deployed to fund priority infrastructure projects, that would boost output, and put the economy on the path of sustainable recovery and growth.”
“It is further expected that the long maturity profile of such loans would enable the economy to be sufficiently diversified for increased export earnings for ease of debt service payments.”
The DMO report noted that, “The Debt Management Strategy, 2016-2019, provides for the rebalancing of the debt portfolio from its composition of 84:16 as at end-December, 2015, to an optimal composition of 60:40 by end-December, 2019 for domestic to external debts, respectively.”
“It supports the use of more external finance for funding capital projects, in line with the focus of the present administration on speeding up infrastructural development in the country, by substituting the relatively expensive domestic borrowing in favour of cheaper external financing. This policy stance has been reinforced by the recent deterioration in macroeconomic variables, particularly with respect to the rising cost of domestic borrowing.
“Hence, the shift of emphasis to external borrowing would help to reduce debt service burden in the short to medium-term and further create more borrowing space for the private sector in the domestic market,” the DMO explained.
Also, as part of the recommendation of the DSA exercise, the DMO expressed “the urgent need for the Government to formulate an Economic Blueprint or Road-Map for the medium-term.
According to the office, “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.”
The DMO also advised the Federal Government to “sustain 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.”
Similarly, the debt management agency, pointed out that, “In view of the continued deterioration in Government’s revenue, occasioned by the drastic fall in the price of oil, Government should reinforce its initiatives aimed at diversifying the productive base of the economy and, thus, improve the nonoil revenue receipts.”
“Accordingly, concrete and urgent steps should be taken to broaden the tax base and improve efficiency in tax administration and collection. vii. Given the country’s huge infrastructural needs, the Government is encouraged to sustain the policy of allocating a minimum of 30 per cent of Federal Government’s budget to capital investments, as well as ensuring judicious utilisation of such funds for infrastructure development.”
Besides, it also said, “In view of the adverse effect on the economy of the recurring delays in budget formulation and passage, there is the need for the Government to ensure strict adherence to the annual budget calendar, so as to facilitate growth recovery, reduce fiscal slippages and delays in budget implementation.”
“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,” the DSA report also recommended.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited witnessed Santa Claus rally on Wednesday after it closed higher by 0.12 per cent.
Strong demand for Nigerian stocks lifted the All-Share Index (ASI) by 185.70 points during the pre-Christmas trading session to 153,539.83 points from 153,354.13 points.
In the same vein, the market capitalisation expanded at midweek by N118 billion to N97.890 trillion from the preceding day’s N97.772 trillion.
Investor sentiment on Customs Street remained bullish after closing with 36 appreciating equities and 22 depreciating equities, indicating a positive market breadth index.
Guinness Nigeria chalked up 9.98 per cent to trade at N318.60, Austin Laz improved by 9.97 per cent to N3.20, International Breweries expanded by 9.85 per cent to N14.50, Transcorp Hotels rose by 9.83 per cent to N170.90, and Aluminium Extrusion grew by 9.73 per cent to N16.35.
On the flip side, Legend Internet lost 9.26 per cent to close at N4.90, AXA Mansard shrank by 7.14 per cent to N13.00, Jaiz Bank declined by 5.45 per cent to N4.51, MTN Nigeria weakened by 5.21 per cent to N504.00, and NEM Insurance crashed by 4.74 per cent to N24.10.
Yesterday, a total of 1.8 billion shares valued at N30.1 billion exchanged hands in 19,372 deals versus the 677.4 billion shares worth N20.8 billion traded in 27,589 deals in the previous session, implying a slump in the number of deals by 29.78 per cent, and a surge in the trading volume and value by 165.72 per cent and 44.71 per cent apiece.
Abbey Mortgage Bank was the most active equity for the day after it sold 1.1 billion units worth N7.1 billion, Sterling Holdings traded 127.1 million units valued at N895.9 million, Custodian Investment exchanged 115.0 million units for N4.5 billion, First Holdco transacted 40.9 million units valued at N2.2 billion, and Access Holdings traded 38.2 million units worth N783.3 million.
By Adedapo Adesanya
Nigerian food and beverage company, Rite Foods Limited, has extended warm Yuletide greetings to Nigerians as families and communities worldwide come together to celebrate the Christmas season and usher in a new year filled with hope and renewed possibilities.
In a statement, Rite Foods encouraged consumers to savour these special occasions with its wide range of quality brands, including the 13 variants of Bigi Carbonated Soft Drinks, premium Bigi Table Water, Sosa Fruit Drink in its refreshing flavours, the Fearless Energy Drink, and its tasty sausage rolls — all produced in a world-class facility with modern technology and global best practices.
Speaking on the season, the Managing Director of Rite Foods Limited, Mr Seleem Adegunwa, said the company remains deeply committed to enriching the lives of consumers beyond refreshment. According to him, the Yuletide period underscores the values of generosity, unity, and gratitude, which resonate strongly with the company’s philosophy.
“Christmas is a season that reminds us of the importance of giving, togetherness, and gratitude. At Rite Foods, we are thankful for the continued trust of Nigerians in our brands. This season strengthens our resolve to consistently deliver quality products that bring joy to everyday moments while contributing positively to society,” Mr Adegunwa stated.
He noted that the company’s steady progress in brand acceptance, operational excellence, and responsible business practices reflects a culture of continuous improvement, innovation, and responsiveness to consumer needs. These efforts, he said, have further strengthened Rite Foods’ position as a proudly Nigerian brand with growing relevance and impact across the country.
Mr Adegunwa reaffirmed that Rite Foods will continue to invest in research and development, efficient production processes, and initiatives that support communities, while maintaining quality standards across its product portfolio.
“As the year comes to a close, Rite Foods Limited wishes Nigerians a joyful Christmas celebration and a prosperous New Year filled with peace, progress, and shared success.”
By Adedapo Adesanya
The Naira closed the pre-Christmas trading day positive after it gained N6.61 or 0.46 per cent against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, December 24, trading at N1,443.38/$1 compared with the previous day’s N1,449.99/$1.
Equally, the Naira appreciated against the Pound Sterling in the same market segment by N1.30 to close at N1,949.57/£1 versus Tuesday’s closing price of N1,956.03/£1 and gained N2.94 on the Euro to finish at N1,701.31/€1 compared with the preceding day’s N1,707.65/€1.
At the parallel market, the local currency maintained stability against the greenback yesterday at N1,485/$1 and also traded flat at the GTBank forex counter at N1,465/$1.
Further support came as the Central Bank of Nigeria (CBN) funded international payments with additional $150 million sales to banks and authorised dealers at the official window.
This helped eased pressure on the local currency, reflecting a steep increase in imports. Market participants saw a sequence of exchange rate swings amidst limited FX inflows.
Last week, the apex bank led the pack in terms of FX supply into the market as total inflows fell by about 50 per cent week on week from $1.46 billion in the previous week.
Foreign portfolio investors’ inflows ranked behind exporters and the CBN supply, but there was support from non-bank corporate Dollar volume.
As for the cryptocurrency market, it witnessed a slight recovery as tokens struggled to attract either risk-on enthusiasm or defensive flows.
The inertia follows a sharp reversal earlier in the quarter. A heavy selloff in October pulled Bitcoin and other coins down from record levels, leaving BTC roughly down by 30 per cent since that period and on track for its weakest quarterly performance since the second quarter of 2022. But on Wednesday, its value went up by 0.9 per cent to $87,727.35.
Further, Ripple (XRP) appreciated by 1.7 per cent to $1.87, Cardano (ADA) expanded by 1.2 per cent to $0.3602, Dogecoin (DOGE) grew by 1.1 per cent to $0.1282, Litecoin (LTC) also increased by 1.1 per cent to $76.57, Solana (SOL) soared by 1.0 per cent to $122.31, Binance Coin (BNB) rose by 0.6 per cent to $842.37, and Ethereum (ETH) added 0.3 per cent to finish at $2,938.83, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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