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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.”

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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Netanyahu Stands Firm as US Halts Bomb Shipment Over Rafah Invasion Warning

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Netanyahu

Amidst escalating tensions between Israel and the United States, Israeli Prime Minister Benjamin Netanyahu has adopted a defiant stance following the US decision to halt a shipment of bombs and warned against Israel’s potential invasion of the southern Gaza city of Rafah.

In a bold statement, Netanyahu declared, “If we have to stand alone, we will stand alone,” emphasizing Israel’s resolve to pursue its objectives despite opposition.

The Prime Minister’s comments, delivered via social media and a subsequent interview with American talk show host Dr. Phil, underscore Israel’s determination to address security threats posed by the Gaza Strip, particularly by Hamas militants operating in Rafah.

Netanyahu reiterated the necessity of military action in Rafah to eliminate the remaining Hamas battalions, condemned Hamas’s history of violence and reiterated Israel’s commitment to achieving victory and ensuring the safety of its citizens.

The US administration, led by President Joe Biden, expressed concerns over the potential humanitarian impact of an Israeli invasion of Rafah, prompting the decision to withhold additional offensive weapons shipments to Israel.

Biden’s statement echoed broader international apprehensions about the escalation of violence and civilian casualties in the conflict-stricken region.

However, Netanyahu remained resolute in Israel’s approach, asserting the country’s right to defend itself against security threats. He emphasized Israel’s efforts to minimize civilian casualties and facilitate the evacuation of civilians from Rafah before any military action.

Despite the US’s decision to pause the bomb shipment, Netanyahu affirmed Israel’s commitment to its longstanding alliance with the US. He acknowledged past disagreements between the two nations but expressed optimism about resolving current tensions through dialogue and cooperation.

In response, White House officials reiterated the US’s support for Israel’s security while urging restraint and emphasizing the need to avoid actions that could exacerbate the humanitarian crisis in Gaza.

The administration clarified that the decision to halt the bomb shipment was aimed at preventing potential civilian casualties in Rafah.

The confrontation between Israel and the US underscores the complexity of navigating regional conflicts and balancing strategic interests. As tensions persist, both nations face the challenge of reconciling their respective security imperatives with broader humanitarian concerns, seeking to avert further escalation while addressing the root causes of the conflict in the Middle East.

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EFCC Declares Former Kogi Governor, Yahaya Bello, Wanted Over N80.2 Billion Money Laundering Allegations

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Yahaya Bello

The Economic and Financial Crimes Commission (EFCC) has escalated its pursuit of justice by declaring former Kogi State Governor, Yahaya Bello, wanted over alleged money laundering amounting to N80.2 billion.

In a first-of-its-kind action, the EFCC announced Bello’s wanted status in connection with the alleged embezzlement of funds during his tenure as governor.

The commission, armed with a 19-count criminal charge, accused Bello and his cohorts of conspiring to launder the hefty sum, which was purportedly diverted from state coffers for personal gain.

The declaration of Bello as a wanted fugitive came after a series of failed attempts by the EFCC to effect his arrest.

Despite an ex-parte order from Justice Emeka Nwite of the Federal High Court, Abuja, mandating the EFCC to apprehend and produce Bello in court for arraignment, the former governor managed to evade capture with the reported assistance of his successor, Governor Usman Ododo.

This latest development shows the challenges faced by law enforcement agencies in holding powerful individuals accountable for their actions.

However, it also demonstrates the unwavering commitment of the EFCC to uphold the rule of law and ensure that justice is served, irrespective of the status or influence of the accused.

In response to the EFCC’s declaration, the Attorney General of the Federation and Minister of Justice, Lateef Fagbemi, issued a stern warning to Bello, stating that fleeing from the law would not resolve the allegations against him.

Fagbemi urged Bello to honor the EFCC’s invitation and cooperate with the investigation process, saying it is important to uphold the rule of law and respect the authority of law enforcement agencies.

The EFCC’s pursuit of Bello underscores the agency’s mandate to combat corruption and financial crimes, sending a strong message that individuals implicated in corrupt practices will be held accountable for their actions.

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Concerns Mount Over Security as National Identity Card Issuance Shifts to Banks

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NIMC enrolment

Amidst the National Identity Management Commission’s (NIMC) recent announcement that the issuance of the proposed new national identity card will be facilitated through applicants’ respective banks, concerns are escalating regarding the security implications of involving financial institutions in the distribution process.

The federal government, in collaboration with the Central Bank of Nigeria (CBN) and the Nigeria Inter-bank Settlement System (NIBSS), introduced a new identity card with payment functionality, aimed at streamlining access to social and financial services.

However, the decision to utilize banks as distribution channels has sparked apprehension among industry stakeholders.

Mr. Kayode Adegoke, Head of Corporate Communications at NIMC, clarified that applicants would request the card by providing their National Identification Number (NIN) through various channels, including online portals, NIMC offices, or their respective banks.

Adegoke emphasized that the new National ID Card would serve as a single, multipurpose card, encompassing payment functionality, government services, and travel documentation.

Despite NIMC’s assurances, concerns have been raised regarding the necessity and security implications of introducing a new identity card system when an operational one already exists.

Chief Deolu Ogunbanjo, President of the National Association of Telecoms Subscribers, questioned the rationale behind the new General Multipurpose Card (GMPC), citing NIMC’s existing mandate to issue such cards under Act No. 23 of 2007.

Ogunbanjo highlighted the successful implementation of MobileID by NIMC, which has provided identity verification for over 15 million individuals.

He expressed apprehension about integrating the new ID card with existing MobileID systems and raised concerns about data privacy and unauthorized duplication of ID cards.

Moreover, stakeholders are seeking clarification on the responsibilities for card blocking, replacement, and delivery in case of loss or theft, given the involvement of multiple parties, including banks, in the issuance process.

The shift towards utilizing banks for identity card issuance raises fundamental questions about data security, privacy, and the integrity of the identification process.

With financial institutions playing a pivotal role in distributing sensitive government documents, there are valid concerns about potential vulnerabilities and risks associated with this approach.

As the debate surrounding the security implications of the new national identity card continues to intensify, stakeholders are calling for greater transparency, accountability, and collaboration between government agencies and financial institutions to address these concerns effectively.

The paramount importance of safeguarding citizens’ personal information and ensuring the integrity of the identity verification process cannot be overstated, especially in an era of increasing digital interconnectedness and heightened cybersecurity threats.

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