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FG Urged to Improve Efficiency in Public Sector

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  • FG Urged to Improve Efficiency in Public Sector

The federal government has been advised to pursue economic liberalisation policies, including privatisation policies so as to improve efficiency in the public sector.

Analysts at Afrinvest West Africa Limited that gave the advice in a report at the weekend said this was neccessary to generate the much-needed cash flow to invest in capital projects and increase borrowing capacity.

Nigeria’s fiscal deficit had been projected to grow by 22.3 per cent from N2.2 trillion in 2016 to N2.7 trillion 2017 fiscal year, thus deficit/GDP ratio is expected to settle at 2.5 per cent in 2017 from 2.1 per cent in 2016.

Whilst the government’s decision to aggressively borrow from the local debt market to fund the budget deficit in 2016 reduced its susceptibility to exchange rate risk, the Medium-Term Expenditure Framework (MTEF) for 2017 suggests that over the medium term, the federal government will be more skewed towards external financing options, in order to free up local funds for private sector investment.

“However, high debt servicing cost to revenue ratio remains a constraint on ability to continue running below 2.5 per cent fiscal deficit to GDP ratio notwithstanding low debt to GDP ratio (17.0%). Also, given the bearish outlook for the naira, the plan to redirect attention towards external financing options suggests the projected amount for debt servicing will shoot up in 2017 – depending on the performance of the naira.

“The 2016 fiscal year has been largely synonymous with a sharp slowdown in economic activities largely as a result of lower oil earnings which constrained fiscal revenue and foreign exchange supply, as well as underwhelming policy responses and a brooding sub-national fiscal crisis which peaked in the first half of 2016,” the report added.

With a change in monetary policy tact to inflation targeting in first quarter 2016 – demonstrated by two rate hikes – in a bid to bolster FX supply, the federal government has been clear on its intent to counterbalance monetary tightening by utilising available fiscal space to buoy expenditure as a strategy to deepen economic diversification and stimulate economic activities.

Also, it pointed out that despite government’s intent to diversify revenue base and relegate oil earnings to the third most important in 2016, data compiled from first half 2016 budget performance puts oil revenue’s contribution to 42.6 per cent of total, the highest amongst all sources.

Indeed, all non-oil revenue sources ran below projected run rates in the first half of 2016. Income from corporate income tax (CIT) was 62.7 per cent less than expected while independent revenue was only 14.2 per cent of projections for half year.

“Thus, the FGN has largely relied on deficit financing to balance its books, with fiscal deficit as at first half of 2016 reported at N1.5trillion (66.6% of total approved for FY:2016), implying a fiscal deficit to GDP ratio of 3.2 per cent compared to 2.1 per cent legislated and three per cent ceiling for a full fiscal year.

Of N1.5 trillion deficit raised, only N159.1bn was released to cash-back capital projects in the period.

“We largely expect revenue to improve in H2:2016 – as observed from FAAC allocations in Q3:2016 – due to translation of oil earnings at lower exchange rate, but still expect fiscal deficit (as percentage of GDP) at year end to exceed 2016 target by a minimum of 0.7 per cent,” the report added.

Nevertheless, last week, the FGN submitted the MTEF and Fiscal Strategy Paper for 2017 – 2019 to the National Assembly with ambitious expenditure targets.

The MTEF provided the framework for the 2017 budget and illuminated the expenditure outlook and revenue expectations for the period.

Aggregate expenditure in the proposed 2017 budget was projected to surpass the N6.1trillion in the 2016 budget by 13.3 per cent (circa N805.9bn) to N6.9 trillion in line with objectives to reflate the economy.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Government

COVID-19 Vaccine: African Export-Import Bank (Afrexim) to Purchase 270 Million Doses for Nigeria, Other African Nations

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African Export-Import Bank (Afrexim) Approves $2 Billion for the Purchase of 270 million Doses for African Nations

African Export-Import Bank (Afrexim) said it has approved $2 billion for the purchase of 270 million doses of COVID-19 vaccines for African nations, including Nigeria.

Prof. Benedict Oramah, the President of the Bank, disclosed this at a virtual Africa Soft Power Series held on Tuesday.

He, however, stated that the lender is looking to raise more funds for the COVID-19 vaccines’ acquisition.

He said: “The African Union knows that unless you put the virus away, your economy can’t come back. If Africa didn’t do anything, it would become a COVID-19 continent when other parts of the world have already moved on.
“Recall that it took seven years during the heat of HIV for them to come to Africa after 12 million people had died.

“With the assistance of the AU, we were able to get 270 million vaccines and financing need of about $2 billion. Afreximbank then went ahead to secure the $2 billion. But that money for the 270 million doses could only add 15 per cent to the 20 per cent that Covax was bringing.

He added that this is not the time to wait for handouts or free vaccines as other countries will naturally sort themselves out before African nations.

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China Calls for Better China-U.S. Relations

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China Calls for China-U.S. Relations

Senior Chinese diplomat Wang Yi said on Monday the United States and China could work together on issues like climate change and the coronavirus pandemic if they repaired their damaged bilateral relationship.

Wang, a Chinese state councillor and foreign minister, said Beijing stood ready to reopen constructive dialogue with Washington after relations between the two countries sank to their lowest in decades under former president Donald Trump.

Wang called on Washington to remove tariffs on Chinese goods and abandon what he said was an irrational suppression of the Chinese tech sector, steps he said would create the “necessary conditions” for cooperation.

Before Wang spoke at a forum sponsored by the foreign ministry, officials played footage of the “ping-pong diplomacy” of 1972 when an exchange of table tennis players cleared the way for then U.S. President Richard Nixon to visit China.

Wang, a Chinese state councillor and foreign minister, said Beijing stood ready to reopen constructive dialogue with Washington after relations between the two countries sank to their lowest in decades under former president Donald Trump.

Wang called on Washington to remove tariffs on Chinese goods and abandon what he said was an irrational suppression of the Chinese tech sector, steps he said would create the “necessary conditions” for cooperation.

Before Wang spoke at a forum sponsored by the foreign ministry, officials played footage of the “ping-pong diplomacy” of 1972 when an exchange of table tennis players cleared the way for then U.S. President Richard Nixon to visit China.

Wang urged Washington to respect China’s core interests, stop “smearing” the ruling Communist Party, stop interfering in Beijing’s internal affairs and stop “conniving” with separatist forces for Taiwan’s independence.

“Over the past few years, the United States basically cut off bilateral dialogue at all levels,” Wang said in prepared remarks translated into English.

“We stand ready to have candid communication with the U.S. side, and engage in dialogues aimed at solving problems.”

Wang pointed to a recent call between Chinese President Xi Jinping and U.S. President Joe Biden as a positive step.

Washington and Beijing have clashed on multiple fronts including trade, accusations of human rights crimes against the Uighur Muslim minorities in the Xinjiang region and Beijing’s territorial claims in the resources-rich South China Sea.

The Biden administration has, however, signalled it will maintain pressure on Beijing. Biden has voiced concern about Beijing’s “coercive and unfair” trade practices and endorsed of a Trump administration determination that China has committed genocide in Xinjiang.

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U.S. Supreme Court Allows Release of Trump Tax Returns

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President Trump Signs Executive Order In Oval Office Of The White House

U.S. Supreme Court Allows Release of Trump Tax Returns

The U.S. Supreme Court on Monday paved the way for a New York City prosecutor to obtain former President Donald Trump’s tax returns and other financial records as part of a criminal investigation, a blow to his quest to conceal details of his finances.

The justices without comment rebuffed Trump’s request to put on hold an Oct. 7 lower court ruling directing the former Republican president’s longtime accounting firm, Mazars USA, to comply with a subpoena to turn over the materials to a grand jury convened by Manhattan District Attorney Cyrus Vance, a Democrat.

“The work continues,” Vance said in a statement issued after the court’s action.

Vance had previously said in a letter to Trump’s lawyers that his office would be free to immediately enforce the subpoena if the justices rejected Trump’s request.

A lawyer for Trump did not immediately respond to a request for comment.

The Supreme Court, which has a 6-3 conservative majority included three Trump appointees, had already ruled once in the dispute, last July rejecting Trump’s broad argument that he was immune from criminal probes as a sitting president.

Unlike all other recent U.S. presidents, Trump refused during his four years in office to make his tax returns public. The data could provide details on his wealth and the activities of his family real-estate company, the Trump Organization.

Trump, who left office on Jan. 20 after being defeated in his Nov. 3 re-election bid by Democrat Joe Biden, continues to face an array of legal issues concerning his personal and business conduct.

Vance issued a subpoena to Mazars in August 2019 seeking Trump’s corporate and personal tax returns from 2011 to 2018. Trump’s lawyers sued to block the subpoena, arguing that as a sitting president, Trump had absolute immunity from state criminal investigations.

The Supreme Court in its July ruling rejected those arguments but said Trump could raise other objections to the subpoena. Trump’s lawyers then argued before lower courts that the subpoena was overly broad and amounted to political harassment, but U.S. District Judge Victor Marrero in August and the New York-based 2nd U.S. Circuit Court of Appeals in October rejected those claims.

Vance’s investigation, which began more than two years ago, had focused on hush money payments that the president’s former lawyer and fixer Michael Cohen made before the 2016 election to two women – adult-film actress Stormy Daniels and former Playboy model Karen McDougal – who said they had sexual encounters with Trump.

In recent court filings, Vance has suggested that the probe is now broader and could focus on potential bank, tax and insurance fraud, as well as falsification of business records.

In separate litigation, the Democratic-led U.S. House of Representatives was seeking to subpoena similar records. The Supreme Court in July sent that matter back to lower courts for further review.

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