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 Adedapo Adesanya
The duo of MRS Oil and FrieslandCampina Wamco Nigeria Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.68 per cent on Friday, June 5.
MRS Plc lost N19.00 during the session to sell at N171.00 per share compared with Thursday’s value of N190.00 per share, and FrieslandCampina Wamco Nigeria Plc depreciated by N8.70 to finish at N181.68 per unit compared with the preceding session’s N190.38 per unit.
As a result, the market capitalisation further lost N22.59 billion to close at N2.607 trillion versus the N2.630 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropped 37.76 points to settle at 4,358.32 points, in contrast to the previous day’s 4,396.08 points.
The alternative stock market closed the last trading day of this week with a price gainer, Central Securities Clearing System (CSCS) Plc, which gained 6 Kobo to quote at N78.40 per share compared with the preceding session’s N78.34 per share. However, it could not prevent the market from going down at the close of business.
Yesterday, the volume of securities bought and sold by investors went down by 50.0 per cent to 140,345 units from the preceding day’s 280,714 units, the value of stocks decreased by 16.5 per cent to N17.9 million from the previous session’s N21.5 million, and the number of deals carried out by market participants fell by 35.7 per cent to 27 deals from the 42 deals recorded on Thursday.
When trading activities closed for the day, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
By Dipo Olowookere
Renewed interest in financial stocks and others lifted the Nigerian Exchange (NGX) Limited by 0.15 per cent on Friday.
Customs Street closed higher yesterday despite the 1.37 per cent loss recorded by the consumer goods sector as a result of profit-taking.
This was offset by gains in the other key sectors of the local bourse, as the insurance counter chalked up 1,14 per cent. The banking space appreciated by 0.90 per cent, the industrial goods segment grew by 0.46 per cent, and the energy sector expanded by 0.01 per cent.
Consequently, the All-Share Index (ASI) went up by 366.00 points to 242,593.31 points from 242,227.31 points, and the market capitalisation gained N235 billion to close at N155.594 trillion compared with the previous day’s N155.359 trillion.
The trio of International Energy Insurance, Abbey Mortgage Bank, and DAAR Communications improved by 10.00 per cent each yesterday to N7.26, N9.35, and N1.98, respectively, while Zichis advanced by 9.39 per cent to N32.38, with Sovereign Trust Insurance up by 8.70 per cent to N2.50.
On the flip side, Academy Press lost 9.84 per cent to quote at N8.25, University Press depreciated by 9.73 per cent to N5.10, Africa Prudential dipped by 2.63 per cent to N12.95, Chams crumbled by 2.44 per cent to N4.00, and International Breweries slipped by 1.59 per cent to N12.35.
Business Post reports that the market breadth index was positive during the session after recording 37 appreciating equities and 14 depreciating equities, implying strong investor sentiment.
Abbey Mortgage Bank led the activity chart with a turnover of 164.1 million units worth N1.5 billion, Ellah Lakes sold 76.7 million units for N767.2 million, Access Holdings transacted 44.8 million units valued at N1.1 billion, Linkage Assurance exchanged 23.0 million units worth N41.2 million, and The Initiates traded 20.2 million units for N562.1 million.
At the close of trades, market participants transacted 608.5 million units worth N32.0 billion in 53,826 deals versus the 588.5 million units valued at N27.9 billion executed in 57,352 deals in the previous session. This showed that the number of deals eased by 6.15 per cent, the volume of transactions rose by 3.40 per cent, and the value of transactions soared by 14.70 per cent.
By Adedapo Adesanya
The Naira further depreciated against the United States Dollar by N3.46 or 0.25 per cent to N1,362.21/$1 from N1,358.75/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 5.
However, it appreciated against the Pound Sterling in the same market window during the session by N4.47 to trade at N1,823.59/£1 compared with the previous day’s N1,828.06/£1, and gained N7.00 against the Euro to sell at N1,574.58/€1, in contrast to Thursday’s closing price of N1,581.58/€1.
For another trading session, the Nigerian Naira maintained stability against the Dollar in the parallel market and the GTBank forex counter on Friday at N1,375/$1 and N1,372/$1, respectively.
The Naira is expected to remain strong in the near term, backed by a rise in external reserves, which are nearing $50 billion, enhancing analysts’ confidence about its outlook in the second half of 2026.
Heightened global uncertainty has reduced the incentive for importers and corporates to demand FX, as cautious trade weighs on import needs. Analysts estimate a $40 billion net FX position for the year, a projection anchored in oil windfall gains.
As for the cryptocurrency market, prices remained depressed following a strong US jobs report that spurred markets to price in higher-for-longer interest rates, sending Treasury yields and the dollar up while hammering stocks, especially AI-related names. Crypto markets saw heavy leverage washouts with about $1.6 billion in positions liquidated over 24 hours.
Ethereum (ETH) gave up 4.9 per cent to trade at $1,584.68, Solana (SOL) fell by 3.3 per cent to $63.22, Bitcoin (BTC) crashed by 1.9 per cent to $61,333.23, Dogecoin (DOGE) slipped by 1.8 per cent to $0.0821, and Ripple (XRP) moderated by 1.8 per cent to $1.09.
Further, TRON (TRX) dropped 1.6 per cent to sell at $0.3197, Binance Coin (BNB) slumped by 1.0 per cent to $581.18, and Cardano (ADA) declined by 0.4 per cent to $0.1589, while the US Dollar Tether (USDT) gained 0.07 to sell at $0.9997, and US Dollar Coin (USDC) closed flat at $0.9998.
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