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Experts, Group Express Concern Over 2017 Budget Proposal

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Budget 2017 year on cube with pencil and clock
  • Experts, Group Express Concern Over 2017 Budget Proposal

The Centre for Social Justice on Thursday faulted the framework to be used to raise the proposed N4.9tn revenue to fund the 2017 budget of the Federal Government.

The group, in a preliminary analysis of the budget proposals submitted to the National Assembly by President Muhammadu Buhari on Wednesday, expressed concern that the revenue target was rather optimistic.

Based on the revenue projections for 2017, a total sum of N1.98tn is being expected from oil sources, while non-oil sources are expected to contribute N1.37tn.

Independent revenues of N807.57bn are also being expected from agencies of government, while N565.1bn and N210.9bn are expected from recovered loot and other revenue sources.

The Lead Director, CSJ, Mr. Eze Onyekpere, in an electronic mail sent to our correspondent, said the inability of the Federal Government to resolve the challenges in the Niger Delta might affect the proposed N1.98tn revenue from oil.

He said, “The first challenge of the revenue framework is on the expected revenue from oil. The lack of a clear path for the resolution of the insurgency in the Niger Delta region will affect the realisation of the projection for oil revenue.

“The President indicated that disruptions to crude oil production partly contributed to significant shortfalls in projected revenues. If the country could not meet the 2016 projection, and without resolving the challenge, it is likely that the 2017 projection will not be met.”

Also speaking on the budget parameters, the Chief Consultant, B. Adedipe Associates, Dr. Biodun Adedipe, said that the budget was a good step in the right direction in reflating the economy.

He said, “This year’s budget is in a good direction in terms of volume, structure and in terms of emphasis. The important thing now is to encourage the government to continue in that direction.

“The sectors to focus on are good, and we should put more emphasis on capital expenditure rather than recurrent expenditure. There is also a need for credit, because you can’t grow a modern economic system without credit; and when credit is expensive, you can’t get the loan that you want to borrow.”

The Head, Investment Advisory, SCM Limited, a research and investment advisory firm, Mr. Sewa Wusu, said the budget would only set the country on the part of economic recovery if it was well implemented to the extent that the government would mobilise the needed financial resources and spend same in critical sectors that would enhance economic recovery.

He, however, stressed that the proposed budget would not take the country out of recession, contrary to the government’s opinion.

The Chief Executive Officer, Advanced Varieties, a research and investment firm, Mr. Kola Akinlade, said apart from the fact that the government got it wrong in terms of the budget assumptions like the exchange rate, oil output, total expenditure and debt servicing figure, there was also an issue with the manner it was planning to raise funds.

He noted that the government might not be able to achieve the target it set with the budget.

The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, expressed concerns over the Federal Government’s intention to borrow N1.254tn from the domestic market to finance the budget deficit of N2.36tn.

Chukwu said the decision would have significant impact on the ability of private investors to get funding from the banks and other lenders.

He stated that the government had said it would restructure the national debt so that 60 per cent would be foreign, and the balance would be local.

A professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Sherriffdeen Tella, expressed doubt that the government would be able to raise up to the N7.3tn it planned to spend in the budget.

He noted that the government was still battling with how to raise funds to implement the 2016 budget.

Similarly, the Senior Associate, Investment Banking, Afrinvest, Mr. Ayodeji Ebo, said it would be very difficult or nearly impossible for the Federal Government to achieve the targets it set in the 2017 budget proposal.

According to him, the government has yet to achieve 50 per cent performance for the 2016 budget due to sundry problems relating to funding and economic policies.

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.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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Nigeria's economic Productivity

OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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