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Senate Rejects ‘Padded’ N143bn FIRS Budget

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2016 Budget
  • Senate Rejects ‘Padded’ N143bn FIRS Budget

The Senate on Thursday rejected the report by its Committee on Finance in which the N143.7bn budget of the Federal Inland Revenue Service was approved.

The lawmakers, while debating the recommendation of the committee during the day’s plenary, criticised the report as lacking details.

While some senators said it was fraught with ambiguities, others pointed out duplication of projects in the proposed budget of the FIRS.

Some of the duplicated projects as noted by the lawmakers include the N586m budgeted for refreshment and meals; N350m for “hire of hall, accommodation and events;” N681m for welfare packages; N200m for sporting activities; and N150m for honorarium.

The sum of N683m was budgeted for security services; N250m for security vote; N90m for office furniture and equipment, while another N300m was budgeted for maintenance of office building; N266m for maintenance of office equipment; and N120m for maintenance of computers and IT equipment.

About N170m was budgeted for maintenance of plants and generators; N120m was set aside for “other maintenance services;” N440m was budgeted for office materials and supplies; N68m for library books and periodicals; N530m for computer materials and supplies; N1.9bn for printing of non-security documents; and N100m for other materials and supplies.

A sum of N2.5bn was budgeted for tax audit investigation and monitoring, while another N500bn was appropriated for tax investigation; N170m for maintenance of plants and generators; N750m was set aside for generator fuel; N700m for motor vehicle fuel; and N1.45bn for general fuel and lubricants.

The committee approved both the recurrent and capital expenditures as proposed by the FIRS.

The President of the Senate, Bukola Saraki, who presided over the plenary, asked the committee to work on the grey areas in its report and represent it in one week.

On the FIRS proposed budget, the report presented by the committee read in part, “The Federal Inland Revenue Service projected to collect tax revenues to the tune of N4.082tn in 2016. This comprises N484bn oil and N3.597tn non-oil revenues.

“The projected four per cent cost of collection on non-oil revenue is N143,904,640,000. The total projected available fund for the 2016 budget is N146,165,108,293, comprising four per cent cost of collection and N2,260,468,293 or 20 per cent of the 2015 operating surplus.”

The Chairman of the committee, Senator John Enoh, while presenting the report to the chamber, recalled that the Senate had on July 21 considered the request of President Muhammadu Buhari on the 2016 budget of the FIRS and referred same to the committee for further legislative action.

On the performance of the 2015 budget of the FIRS, the report stated that the National Assembly’s joint Committees on Finance approved a revenue projection of N436tn, comprising N1.74tn oil revenue and N262tn non-oil revenue.

The joint committees also projected the four per cent cost of collection of non-oil revenue by the FIRS to be N104,723,880,000.

The committee stated the summary of the proposed 2016 expenditure of the service as follows: personnel, N64,491,130,526; overhead, N46,363,000,000; and capital, N32,868,300,000, bringing the total expenditure to N143,722,430,526.

The committee further observed, “The total personnel costs are for salaries, wages, allowances, performance bonuses and social contributions. The 8,000 members of staff are proposed to be on the payroll during the 2016 financial year, which accounts for the increase of 19 per cent above the actual staff strength of 6,748. The projection presumes a recruitment of new staff members in 2016.

“The overhead cost is very vital in driving the achievement of the FIRS’ core objectives of tax revenue generation. The provisions in the 2016 budget give more emphasis on availability of office materials, training, consulting and professional services, and publicity.

The committee recommended that a total expenditure of N143,722,430,526 be approved for the FIRS, which the Senate rejected.

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.

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Economy

Cuba’s Central Bank Suspends US Dollar Deposits Nationwide

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US Dollar - Investorsking.com

Cuba, the island country located where the Caribbean Sea, Gulf of Mexico, and the Atlantic Ocean meet, said this week U.S. dollars will be suspended in the country.

The mandate comes from the country’s central bank and foreign tourists have been told to leave U.S. dollars at home when visiting. The announcement was invoked at a roundtable discussion that was aired on state-sponsored Cuban television.

“In view of the obstacles that the U.S. embargo creates for the national bank system to deposit abroad the U.S. dollars that are collected in the country, a decision was made to temporarily suspend deposits in U.S. banknotes in Cuba’s bank and financial system,” the Central Bank of Cuba (Banco Central de Cuba, BCC) members said.

Yamilé Berra Cires, the vice president of the BCC, explained during the roundtable discussion that at the beginning of the Trump administration’s leadership, the U.S. tightened the embargo’s grip. The United States has had an embargo with Cuba since 1958 and the U.S. has had numerous issues with Cuba during the Eisenhower presidency and Kennedy presidency as well. After the 2008 crisis, the U.S. and Cuba seemed to gravitate toward friendlier terms during the Obama presidency.

However, BCC vice president Berra Cires claims issues have gotten worse since Trump and said 24 foreign banks stopped dealing with Cuba. Berra Cires also said during the roundtable discussion that 95 foreign financial institutions reported on the transgressions of Cuban national banks doing business with counterparties. “It is ever more difficult for Cuba to find international banking or financing institutions willing to receive, convert or process U.S. currency in cash,” Berra Cires further remarked.

“People who will be coming into the country during this time will have to arrive with a currency other than the dollar,” Francisco Mayobre Lence the BCC’s first vice president said.

Of course, after hearing about the USD ban in Cuba, members of the cryptocurrency community wanted Cuba to adopt digital currencies like El Salvador recently did with bitcoin. “It’s like [a] 50-year embargo. It’s really depressing,” one individual wrote about the Cuba situation with America on Reddit. “Will they take crypto now?” another Redditor asked in the r/cryptocurrency thread. Another crypto enthusiast responded to the question and said:

I doubt they want to be the last Latin American country to do so.

Minister-president of the Cuban central bank, Marta Sabina Wilson González explained during the roundtable discussion that Cuba had no choice but to make the decision. “We had no choice but to take this measure, which we are explaining at the Round Table, as we always do when it is a measure that affects the people, who will understand that there is no other option,” the minister detailed.

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Economy

Kenya Receives $750 Million Loan from World Bank to Boost Economic Recovery

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World Bank Loan - Investors King

Kenya has received a $750 million loan from the World Bank to support its budget and help the East African economy recover from the effects of the COVID-19 pandemic, the multilateral lender said on Friday.

The Kenyan government has been pushing hard to secure foreign funding to fill a wide budget deficit before its financial year closes at the end of this month.

The $750 million disbursement is part of World Bank’s Development Policy Operations (DPO), which lends cash for budget support instead of financing specific projects.

The bank said some of the funds would go towards setting up an electronic procurement system for government goods and services to improve transparency.

The World Bank said the concessional loan will have a 3.1% annual interest rate. Typically, World Bank loans have zero or very low interest rates and have repayment periods of 25 to 40 years, with a five- or 10-year grace period.

On Thursday, Finance Minister Ukur Yatani presented to parliament the 2021/22 budget, with a deficit of 7.5% of gross domestic product, reduced from 8.7% for the current fiscal year ending this month.

The finance ministry forecasts a economic growth of 6.6% this year, recovering from 0.6% in 2020 when sectors like tourism and related services collapsed due to restrictions imposed to curb the spread of COVID-19.

The World Bank forecasts Kenya’s economy will grow 4.5% this year, and 4.7% in 2022.

President Uhuru Kenyatta, who took the helm in 2013, has overseen a jump in public borrowing. Total debt stands at 70% of GDP, up from about 45% when he took over – a surge that some politicians and economists say is saddling future generations with too much debt.

The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways.

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Economy

FG Spends N612.7 Billion on Domestic Debt Servicing in Q1 2021

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Naira Exchange Rates - Investors King

The latest report from the Debt Management Office (DMO) has revealed that the Federal Government spent a total sum of N612.71 billion on domestic debt servicing in the first quarter (Q1) of 2021.

In the report released on Wednesday, the DMO said the Federal Government paid holders of mature Nigerian Treasury Bills (NTB) N17.23 billion in January, N12.3 billion in February and N5.49 billion in March 2021. Indicating that the Federal Government paid a combined sum of N35.03 billion to NTB holders in Q1 2021.

Similarly, the Federal Government paid N537.783 billion to holders of Federal Government of Nigeria bonds in three instalments of N201.95 billion in January, N79.26 billion in February and N256.58 billion in March 2021.

The Federal Government also paid N308.38 million in three tranches to subscribers of mature FGN Savings Bond. FG paid N111.65 million in January, N97.074 million in February and N99.65 million in March 2021.

Another N8.16 billion was used to settle FGN Sukuk Rentals in March 2021. No payment was made in January and February 2021.

The Federal Government released N31.44 billion as principal repayment “in respect of promissory notes during the quarter under review.

A monthly breakdown revealed that a total sum of N219.29 billion was released to service domestic debts in January, N123.09 billion in February and N270.33 billion in March. Therefore, bringing the total amount spent on domestic debt servicing in the first quarter of 2021 to N612.71 billion.

Nigeria’s total debt rose to N33.1 trillion in the first quarter of 2021, according to the report released by the DMO.

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