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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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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