Major oil-producing nations, seeking to curb a flood of supply that’s cut prices almost in half in the past year, agreed to wrap up talks on capping output by the start of March, according to Russia’s Energy Ministry.
“We agreed that all consultations should be completed by March 1,” Energy Minister Alexander Novak told state TV on Saturday. Countries publicly supporting the deal export about three-quarters of the world’s crude, so it “would be a positive signal” for the market, Novak said.
Saudi Arabia, Russia, Venezuela and Qatar reached a preliminary agreement in Doha on Tuesday to freeze output at January levels if other states join them. The deal’s success hinges most notably on the attitude of Iran, which has vowed to raise production by 1 million barrels a day after sanctions on the nation’s exports were lifted last month.
Iran was “constructive” on the Doha outcome, although the country hasn’t made any statements on whether it may join the pact, Novak said. Consultations with nations that aren’t members of the Organization of the Petroleum Exporting Countries are also possible, he said, when asked about Mexico and Norway.
Talks with OPEC on cuts also aren’t ruled out if the market worsens, Interfax reported Saturday, citing Vladimir Voronkov, Russia’s envoy for international organizations based in Vienna.
While the Doha pact was the first coordinated action to counter an oil slump by the two-largest producers in more than a decade, Saudi Arabia and Russia both pumped almost record levels of crude last month. An output freeze is the start of a process that could lead to other steps in coming months, Saudi Oil Minister Ali al-Naimi said after the talks.
“We’ve worked out a common position,” Novak said, commenting on the deal. “We discussed various options, including doing nothing and cutting production.”
CBN Holds Monetary Policy Rate At 11.5%, Leaves Other Parameters Constant
In its continuous efforts to boost the country’s economy and as well, reduce inflation, the Central Bank of Nigeria (CBN) led Monetary Policy Committee (MPC) has retained the Monetary Policy Rate (MPR) at 11.5% with all other parameters unchanged.
Governor of the CBN, Godwin Emefiele, disclosed this while reading the communique of the first monetary policy committee meeting of the year on Tuesday.
The committee unanimously voted to retain the Cash Reserve Ratio at 27.5% and the liquidity ratio at 30 percent.
According to the MPC, the Nigerian economy is expected to continue its positive trajectory following the impressive growth recorded in the third quarter of 2021.
Monetary policy refers to any policy measure devised by the Central Bank to control the cost, availability and supply of credit.
According to the apex bank, the ultimate goals of monetary policy are basically to control inflation, maintain a healthy balance of payment position in order to safeguard the external value of national currency and promote adequate and sustainable level of economic growth and development. These goals are achieved by controlling money supply in order to enhance price stability (low and stable inflation) and economic growth.
Investors King reports that CBN undertakes monetary policy in order to maintain Nigeria’s external reserves to safeguard the international value of the legal currency, promote and maintain monetary stability and a sound and efficient financial system in Nigeria, act as banker and financial adviser to the Federal Government and act as lender of last resort to banks.
The legal backing for monetary policy by the Bank derives from the various statutes of the bank such as the Central Bank of Nigeria Act of 1958 as amended in CBN Decree No. 24 of 1991, CBN Decree 1993 (Amendment), CBN Decree No. 3 of 1997 (Amendment), CBN Decree No. 4 of 1997 (Amendment), CBN Decree No. 37 of 1998 (Amendment), CBN Decree No. 38 of 1998 (Amendment), CBN Decree 1999 (Amendment) and CBN Act of 2007 (Ammended).
COVID-19: IMF Rolls Out $50 Billion Trust Fund, Targets Low-income, Vulnerable Countries
The COVID-19 pandemic, no doubt, has had significant economic consequences, especially on low-income and less developed countries.
It is in view of this that the International Monetary Fund (IMF) proposed a $50 billion trust fund to help these low-income and vulnerable middle-income countries build resilience and ensure a sustainable recovery through a Resilience and Sustainability Trust (RST), Investors King has learnt.
The RST’s central objective is to provide affordable long-term financing to support countries as they tackle structural challenges.
According to the IMF, broad support from the membership and international partners will further aid in the approval of the RST by the IMF Executive Board before the upcoming Spring Meetings and for it to become fully operational before the end of the year.
Apart from the pandemic, climate change is another long-term challenge that threatens macroeconomic stability and growth in many countries through natural disasters and disruptions to industries, job markets, and trade flows, among others.
Hence, the RST support aims to address macro-critical longer-term structural challenges that entail significant macroeconomic risks to member countries’ resilience and sustainability, including climate change, pandemic preparedness, and digitalization.
The IMF and World Bank staff have worked closely to develop a coordination framework on RST operations on climate risks, building on earlier experience in supporting countries with structural reforms. Similar frameworks with relevant institutions are expected to be developed in the coming months in this and other reform areas.
Meanwhile, to qualify for the RST support, an eligible member would need a package of high-quality policy measures consistent with the RST’s purpose; a concurrent financing or non-financing IMF-supported program with appropriate macroeconomic policies to mitigate risks for borrowers and creditors; and sustainable debt and adequate capacity to repay the Fund.
The RST would be established under the IMF’s power to administer contributor resources, which allows for more flexible terms, notably on maturities, than the terms that apply to the IMF’s general resources.
Consistent with the longer-term nature of balance of payments risks the RST seeks to address, its loans would have much longer maturities than traditional IMF financing.
Specifically, 20-year maturity and a 10-year grace period has been proposed.
FG Suspends Removal of Fuel Subsidy Over Inflation Concerns
The Federal Government has suspended plans to remove fuel subsidy by the end of the first half of 2022 over heightened inflation, according to the Minister of Finance, Mrs. Zainab Ahmed.
The Minister made the statement at a meeting with President of the Senate, Sen. Ahmad Lawan, at the National Assembly on Monday.
She said the removal of fuel subsidy at any time this year could escalate inflationary pressure in the country.
“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry,” Ahmed said at the meeting.
“Mr. President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.
“One of these include the roll-out of the refining capacities of the existing refineries and the new ones which would reduce the amount of products that would be imported into the country.
“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for subsidy from July 22 to whatever period that we agreed was suitable for the commencement of the total removal.”
Agusto&Co, a research, credit ratings and credit risk management firm, had projected the same thing in its economic outlook for 2022 sent to clients. The firm had argued that it was impossible for the current administration to remove fuel subsidy given its little political capital.
The firm said no, the FGN can not remove subsidy in full in 2022 because “this is a tough political decision that we believe is best made by a government with a large amount of political capital. Current government has ruled for seven years, has about a year left and has little political capital to expend.”
Augusto further stated that the federal government is not likely to boost infrastructure spending in 2022 “because the ability of government to invest in infrastructure will still be constrained by weak tax revenues and high operating expenses.”
Therefore, it said the government cannot fully fund Nigeria’s 17 trillion budget as its revenue is limited to ₦5 trillion and funding sources are constrained.
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