The Managing Director, Financial Derivatives Company, Mr. Bismarck Rewane, on Thursday said the monetary policy strategy needed to reinforce and complement fiscal policy at a time when oil price has dropped to $30 per barrel.
The renowned economist, who spoke at a roundtable discussion organised by Business Eye in Lagos, stated that the currency misalignment would remain for some time to come, stressing that there was need for the right exchange rate policy.
While speaking on fiscal strategy, he said, “When you are in this kind of situation, you must spend your way out of it. The fiscal strategy is intact; what is missing is the monetary policy strategy to reinforce the fiscal strategy.
“Your exchange rate policy when your price of oil was $114 cannot be the same exchange rate policy when the price falls to $30. We had money, we squandered it; we had opportunity, we gave it up.
On how to use monetary policy to complement and reinforce fiscal policy, Rewane said, “We think that you come up with parameters that you will use to measure economic performance and that will decide the exchange rate policy.
“If these things are moving upwards, the exchange rate will appreciate. If they are going downwards, it will adjust downwards.”
He said those things include the price of oil, the level of production, the level of external reserves, inflation rate, and the purchasing managers’ index.
“You cannot deal with an exchange rate that is inefficient,” the FDC MD said.
On what $30 per barrel oil price meant to Nigeria, Rewane said, “In 2014, the price of oil was $116 per barrel and the cost of production was $25 per barrel. The yield on every barrel was $91. Cost of production per barrel is still $25, the price is $30. So the yield has gone from $91 to $5 per barrel. That is the magnitude of the problem.
“In times like this, you have to ask yourself, have we been here before? Yes we have been here before. In 2008, we had the same issue. But then we were fatter, wiser and the problem in 2008 was shorter.
“In 2008, we suffered for nine months only and oil price bounced back. But average price of oil in 2009 was $61.9 per barrel; 2016, the average price is projected at $45. External reserves in 2009 were $53bn; gross external reserves today are $28bn. The exchange rate in 2009 was 150 BDC, official 154. Today, BDC is 300, official is 199. Excess crude account was $22bn in 2009; it is $2bn today. Total external debt in 2009 was $10.4bn; total external debt today is $17.1bn.”
EFCC Grills Suspended Accountant-General of The Federation, Discovers 17 Properties
The Economic and Financial Crimes Commission (EFCC) said it has traced not less than properties to the Accountant-General of the Federation, Ahmed Idris.
On Wednesday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the suspension of Idris who is currently being grilled by the EFCC for fraud amounting to N80bn.
The letter titled: ‘Letter of Suspension’, read in part: “Following your recent arrest by EFCC on allegations of diversion of funds and money laundering, I write to convey your suspension from work without pay effective May 18, 2022.”
Investors King can confirm that an anonymous EFCC official revealed that the 17 properties linked to the former AG of the Federation are located in the UK, Dubai, Abuja, Lagos, and Kano.
However, he said preliminary investigations showed that the nation’s chief accountant allegedly used proxies to buy some of these properties. The commission would therefore need to invite some of the proxies of the accountant-general.
The official added that from all indications, these properties were purchased while Idris was in office and did not declare them before the Code of Conduct Bureau as stipulated by law.
“About 17 houses in London, Lagos, Kano, Abuja and Dubai have been traced to him. In Abuja, some of the houses are located in serviced estates,” he added.
Investors King reported earlier in the week that EFCC had arrested the suspended Accountant-General, saying “the AGF raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates.”
“The funds were laundered through real estate investments in Kano and Abuja.
“Mr. Idris was arrested after failing to honour invitations by the EFCC to respond to issues connected to the fraudulent acts.
“It further alleged that the funds were laundered through real estate investments in Kano and Abuja,” EFCC added.
REcall that Ahmed Idris had been under surveillance since last year following allegations that he offered huge sums of money to a family in order to secure the marriage of their 16-year-old daughter.
Nigeria’s Trade Deficit Rises to $765m in Q1 2022 – CBN
The Central Bank of Nigeria (CBN) has said the value of Nigeria’s international trade deficit rose by 175.13 percent from $152.94m recorded in January 2022 to $420.79m in March 2022.
The International Trade Summary on the CBN’s website reports that the total value of international trade as of the first quarter (Q1) of 2022 was $28.77bn. Imports stood at $14.77bn while exports accounted for $14.01bn, reflecting a total trade deficit of N764.69m.
In January 2022, export was $4.74bn and import was $4.89, with a trade deficit of $152.94m.
The value of the trade deficit increases further in February 2022 to hit $190.96m, with exports at $4.70bn and imports at $4.89bn.
There was a massive increase recorded in March 2022 as the trade deficit jumped to $420.79m, with exports at $4.57bn and imports at $4.99bn.
In June 2021, Godwin Emfiele, the CBN Governor has said Nigeria would reduce its imports bill by the first quarter of 2022, especially with the Dangote refinery projected to resume operations. This, he said would help reduce the importation of finished petroleum products.
“Of course for petroleum products, by the time the refinery goes into production by the first quarter of next year and the petrochemical plants we would have reduced our importation by about at least close to 35 per cent,” he said.
However, Nigeria has failed to cut down on its import bill and the Dangote refinery is yet to be completed and operational. In fact, a recent Fitch report estimated that the refinery won’t be operational until 2024, and that is if Aliko Dangote raises the needed $1.1 billion (N900 billion) necessary for its completion.
In its recent report titled ‘Reforms Towards Resolving Foreign Exchange Challenges in Nigeria’, the Nigerian Economic Summit Group (NESG) explained how a rising trade deficit caning impact the nation’s economy.
According to the NESG, Nigeria will continue to rely on foreign loans via Eurobonds and multilateral financial institutions to bolster its foreign reserves as long as the nation’s trade balance continues to decline.
In part, the report stated: “Owing to the deteriorating trade balance position, the country is increasingly exposed to external borrowing through Eurobonds and multilateral loans to shore up its external reserves. In 2021, the trade deficit widened to N1.9tn from N178.3bn in 2020.
“The country had persistently recorded a trade deficit since the fourth quarter of 2019 when the land borders were shut. However, maintaining a trade surplus consistently coupled with adequate inflows of foreign investments will contribute significantly to improving the net flows of forex through the economy – which crashed from $100.8bn in the first three quarters of 2014 to $44.5bn in the corresponding period of 2021.”
“Huge dependence on imports has limited the CBN’s ability to effectively manage the demand for foreign exchange,” it stated.
NESG further said, “Meanwhile, the massive dependence on imports has constrained the CBN’s ability to manage forex demand by prohibiting certain commodities that could otherwise be produced locally from accessing forex at the official market since 2015.
“The result of this policy action has heightened demand pressures in the parallel market, leading to a wide gap between the official exchange rate (now the I&E Window exchange rate) and the parallel market exchange rate. The parallel market premium averaged N104.7/US$ in 2021, 64.9 per cent higher than the average premium of N63.5/US$ in 2020.”
Twitter Agog As Nigerians React To AGF’s Arrest, Fraud Allegations
The social media has been buzzing all day as Nigerians were in dismay, following the arrest of the Accountant-General of the Federation, Ahmed Idris by the Economic and Financial Crimes Commission (EFCC) for allegedly looting a sum of N80bn.
While many Nigerians lauded the efforts of the EFCC, some said the looted money is far more than what the Academic Staff Union of Universities (ASUU) is requesting.
In his reaction via the micro-blogging platform, Twitter, the spokesperson of former President Goodluck Ebele Jonathan, Reno Omokri said: “Dear ASUU, If the Accountant General of the Federation can steal N80bn, you have no reason to end your strike. Ask Buhari to use the stolen N80bn to pay you and keep the change. After all, the money ASUU is asking for is not even up to N80bn!”
Some Other Twitter Reactions:
The Mouthpiece @Real_AmakaIke said: “Fight Against Corruption In Nigeria Always End With Cruise. Just Loot And Bail Yourself If At All You Are Arrested,And They Will Reward You With Another Political Position. Ahmed Idris’s 80 Billion Naira Fraud Case Has Ended With Immunity. Nigeria Is A Very Big Scam.”
Adenike Danjuma @DeNiike_Ahmed said: “Idris should be persecuted using Sharia law.”
Kwaghngu John @DoshimaJohn – “According to the EFCC, the funds (stolen by the AGF Ahmed Idris) were laundered via real estate investments in Kano and Abuja” Real estate investments!!! Folks standing on this table ehn! It will take some balls to vigorously shake this table. A table of crooks & rogues.”
Ayemojubar.js @ayemojubar – Alhaji Ahmed Idris, the Accountant General of the Federation stole $137,931,034. Please, how much is ASUU asking for?
Adebola @ThisIsAdemuyiwa – Our problem is not religion and ethnicity. Religion and ethnicity are distractions. Alh. Ahmed Idris (Accountant General) who stole N80bn couldn’t have done it alone. He’d have been aided by Southerners from other faiths . Let nobody deceive you.
OKEKE OLIVER (Don Olive) @OKEKEOLIVER2 – Ahmed Idris was appointed Accountant General of the Federation on 25th June, 2015, to succeed Jonah Ogunniyi Otunla. His predecessor was sacked by Buhari for alleged misappropriation of N2.5bn naira.
If you make ₦28.3m a year, it would take you 40 years to make ₦1 billion. The Accountant General stole N80bn in 4 years, at ₦28.3M/year it would take you 3,200 years to accumulate that much money. Ahmed Idris you are very very heartless,” another user, Jerry ayuba (@Donjerry_) said.
Investors King recalls that Operatives of the Economic Financial Crimes Commission (EFCC), on Monday, arrested the current Accountant General of the Federation, Mr. Ahmed Idris in connection with alleged diversion of funds and money laundering activities.
EFCC, in a statement, wrote: “The Commission’s verified intelligence showed that the AGF raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates.
“The funds were laundered through real estate investments in Kano and Abuja.
“Mr. Idris was arrested after failing to honour invitations by the EFCC to respond to issues connected to the fraudulent acts”.
EFCC further noted that: “Its verified intelligence showed that the AGF raked off the funds through bogus consultancies and other illegal activities, using proxies, family members and close associates.
“It further alleged that the funds were laundered through real estate investments in Kano and Abuja”.
The anti-graft agency stated that Idris was arrested after failing to honour invitations to respond to issues connected to the fraudulent acts.
Ahmed Idris was appointed as Accountant General on June 25, 2015, to succeed Jonah Ogunniyi Otunla who was sacked by Muhammadu Buhari on allegedly misappropriating security agencies’ funds.
EFCC had, on December 7, arraigned the former Accountant-General of the Federation, Mr Jonah Otunla, and eight others before the Federal High Court in Abuja on money laundering charges involving diversion of N2bn from the account of the Office of the National Security Adviser.
The defendants were to be arraigned before Justice Nnamdi Dimgba on Tuesday but the arraignment was rescheduled to December 7 due to the absence of the judge, who was said to be attending a training organised for some judges in the country.
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