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2017 Budget: N1.67trn External Borrowing Projections Unrealistic- Expert

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  • N1.67trn External Borrowing Projections Unrealistic

The President, Time Economics, Dr Ogho Okiti says the Federal Government’s plan to borrow N1.67tn from foreign institutions to fund part of the N2.36tn deficit in the 2017 budget is not a viable option.

Okiti, at the 2017 Nigeria Economic Outlook Conference held on Thursday in Abuja, said Nigeria’s main hurdle to borrowing externally was the current poor economic performance.

According to him, institutions like the World Bank requires credible economic growth and recovery plan as prerequisites to borrowing.

He said, “The Federal Government is projecting an external borrowing of N1.67tn in 2017.

“This means that at an exchange rate of N305 to a dollar, the government is expected to borrow $5.475bn.

“If you look at the country’s economic condition and rating, it is very difficult to see where these almost $5.5bn will come from.

“In 2016, the expectation was that the government would borrow 3.5billion dollars. But at the end of the day, it only succeeded in borrowing $600m.

“If we succeed in getting the $1bn that the African Development Bank promised to borrow us, we are still left with more than $4bn to borrow.

“The highest I see us getting, through external borrowing, is $1.4bn.”

Okiti said consequently, the government would have no choice but to either borrow locally and crowd out private borrowers or fail to implement the capital expenditure component of the budget.

He said, “It was worrisome that the proposed N2.2tn Capital Expenditure is close to the N2.36 tn shortfall in the budget.”

He also expressed concern that if the government could not borrow enough, it was likely to cut capital expenditure to meet its already bulging recurrent obligations such as salaries, overhead and debt service.

On revenue projections of the 2017 budget, he agreed that the crude oil revenue projection was realistic and achievable, so also some components of the non-oil revenue projections.

Okiti, however, said that the Corporate Income Tax revenue projection of N808bn for 2017 was unrealistic, even though, it was lower than the N867bn projected in the 2016 budget.

According to him, only N323bn accrued to the government from CIT in 2016 and that, so far, no new tactic has been introduced to show that there will be a leap of over N400bn in this year’s CIT.

He said also that the Value Added Tax projection of N242billion and the Customs revenue projections of N278bn were achievable with higher level of tax compliance.

He said, “The oil price assumption of 42.5dollars per barrel looks conservative since oil is now selling at over 50dollars per barrel.

“Oil production of 2.2million barrels per day is too ambitious because we have not done 2.2million barrels per day in recent years.

“Averagely last year, we produced 1.6million barrels per day; thus, in 2017, we should not project more than 1.9million barrels per day.

“The N305 projected exchange rate, I believe is sustainable especially with higher foreign exchange expected in 2017 from oil prices.

“Nigeria’s decision on the J.V cash calls will reduce government revenue in the short term because Nigeria has to pay back the about 7billion dollars that it owes the IOCs.

“So, we expect that this deal will reduce government revenue from oil in the short term. However, in the long term, we think this is one of the best policies that this government has taken.”

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

SERAP Urges FG to Slash Politicians’ Allowances

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The Socio-Economic Rights and Accountability Project (SERAP) has urged the Chairman of Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Elias Mbam, to urgently review upward the remuneration, allowances, and conditions of service for Nigerian Judges, and reduce the remuneration of President Muhammadu Buhari and other political office-holders in order to address the persistent poor treatment of Judges, and improve access of victims of corruption to justice.

The appeal came on the heels of a nationwide industrial action by the Judiciary Staff Union of Nigeria (JUSUN) to press home their demand for financial autonomy for the judicial arm of government, and the federal government silence on the judiciary workers’ strike that has grounded court activities across the country.

In a letter dated April 10, 2021, which was signed by SERAP Deputy Director, Kolawole Oluwadare, the organisation said Judges should get all they are reasonably entitled to, and that it is unfair, illegal, unconstitutional, and discriminatory to continue to treat Judges as second-class people, while high-ranking political office holders enjoy lavish salaries and allowances.

SERAP expressed concern that the remuneration and allowances of Judges have fallen substantially behind the average salaries and allowances of political office-holders such as president, vice-president, governors and their deputies, as well as members of the National Assembly.

The letter read in part: “According to our information, the last review of the remuneration, allowances, and conditions of service for political, public and judicial office holders carried out by RMAFC in 2009 shows huge disparity between the remuneration and allowances of judges and those of political office holders.

“Judges’ work is very considerable but they cannot give their entire time to their judicial duties without the RMAFC reviewing upward their remuneration and allowances, and closing the gap and disparity between the salaries of judges and those of political office holders such as the president, vice-president, governors and their deputies, as well as lawmakers.

“We would therefore be grateful if the recommended measures are taken within 14 days of the receipt and/or publication of this letter. If we have not heard from you by then, the Incorporated Trustees of SERAP shall take all appropriate legal actions to compel the RMAFC to comply with our requests.”

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COVAX Delivered 38m Vaccine Doses To Over 100 Countries, Says WHO

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The World Health Organisation (WHO) yesterday announced that more than 100 countries have received life-saving COVID-19 vaccines from COVAX, the global mechanism for equitable access to COVID-19 vaccines.

It said the milestone comes 42 days after the first COVAX doses were shipped and delivered internationally, to Ghana on February 24th.

In a statement, the United Nations’ Agency revealed that COVAX has now delivered more than 38 million doses across six continents, supplied by three manufacturers – AstraZeneca, Pfizer-BioNTech and the Serum Institute of India (SII).

Of the over 100 economies reached, 61 are among the 92 lower-income economies receiving vaccines funded through the Gavi COVAX Advance Market Commitment (AMC).

It, however, said despite reduced supply availability in March and April – the result of vaccine manufacturers scaling and optimising their production processes in the early phase of the rollout, as well as increased demand for COVID-19 vaccines in India – COVAX expects to deliver doses to all participating economies that have requested vaccines in the first half of the year.

According to the CEO of Gavi, the Vaccine Alliance, Dr. Seth Berkley, “In under four months since the very first mass vaccination outside a clinical setting anywhere in the world, it is tremendously gratifying that the roll-out of COVAX doses has already reached 100 countries.

“COVAX may be on track to deliver to all participating economies in the first half of the year yet we still face a daunting challenge as we seek to end the acute stage of the pandemic: we will only be safe when everybody is safe and our efforts to rapidly accelerate the volume of doses depend on the continued support of governments and vaccine manufacturers. As we continue with the largest and most rapid global vaccine rollout in history, this is no time for complacency.”

The WHO Director-General, Dr. Tedros Adhanom Ghebreyesus, said: “COVAX has given the world the best way to ensure the fastest, most equitable rollout of safe and effective vaccines to all at-risk people in every country on the planet.

“If we are going to realise this great opportunity, countries, producers and the international system must come together to prioritise vaccine supply through COVAX. Our collective future, literally, depends on it.”

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Approved Ibom Deep Sea Port, Proposed $1.4B Fertilizer Plant Will Change Akwa Ibom’s Economic Status – Gov. Udom

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Akwa Ibom State Government has said the approved Ibom Deep Seaport and the proposed $1.4 billion Fertilizer and Ammonia Plant are expected to change the economic status of the state.

The State Governor, Mr. Udom Emmanuel, made the assertion in an Easter message to the people of the state.

He maintained that with the recent approval and take off of the federal government’s approved Oil and Gas Free Zone and the ongoing construction of the Sterling Petrochemical Plant at Eastern Obolo, the state would be ready to dump its status as a civil service state.

The governor said the fertilizer and ammonia plants should be supported by all indegenes and residents irrespective of political affiliation because of its capacity to change the economic fortunes of the state.

The governor who commended President Muhammadu Buhari for approving the industrial projects in the state said construction work on the Ibom Deep Seaport would commence very soon.

“In recent past, we have been blessed with life-changing projects such as Sterling Petrochemical Plant in Eastern Obolo, where construction is in an advanced stage.

“Two months ago, the Federal Executive Council, (FEC) approved the license for us to commence the construction of our long desired Ibom Deep Seaport. Work would soon commence on this gigantic project. These are huge achievements for our State and our people.

“Ibom Deep Seaport will open up our economic fortunes; create employment and wealth opportunities for our people and throw open our State as a major maritime hub in our nation.

“We thank the President and the Commander in-Chief of the Nigerian Armed Forces, Muhammadu Buhari (GCFR) for this kind approval,” he said.

Continuing, Emmanuel said: “About three weeks ago, we signed a $1.4 billion Fertilizer and Ammonia plant with our Moroccan counterparts. The plant will again create huge employment and other supply chain activities for our people, which will transform us from a civil service oriented state to a fast industrialising one.

“These are huge achievements that should gladden the hearts of every Akwa Ibomite irrespective of political affiliations.”

He reminded the people of the state that the essence of Easter would be lost if the resurrection of Christ is not allowed to illuminate their souls through love and sacrifice to one another.

“Let the fishermen in the ocean fronts of Mbo, Okobo, Eastern Obolo and Ibeno love one another. Let the farmers in the rice plantations at Ini, Ikono, Ika, Onna and Nsit Ibom love one another.

“Let the civil servants and public servants, politicians in all political parties, members of all denominations, preachers of all faiths, love one another.

“When we let love drive our every action and every thought, when we let it drip from our lips and from our hands, then shall the joy of Easter be complete, and our State shall surely attain the lofty height set for it by our ancestors when they named it Akwa Abasi Ibom State.” the Governor stated.

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