Connect with us

Economy

Senate Approves $5.5bn Foreign Loan as External Debt Rises to $15.4bn

Published

on

Loan - Investors King
  • Senate Approves $5.5bn Foreign Loan as External Debt Rises to $15.4bn

The Senate Tuesday approved the request by the executive to raise $3 billion from the international capital market (ICM) through a Eurobond or Diaspora Bond issue or a combination of both to refinance maturing domestic debts, and raise another $2.5 billion from multilateral donor institutions to fund the capital component of the 2017 budget.

The approval coincided with the latest data released by the Debt Management Office (DMO) Tuesday showing that Nigeria’s debt stock hit N20 trillion as of September 30, 2017, with the foreign component accounting for 23.04 per cent or N4.694 trillion ($15.40 billion) of the total debt stock.

The approval by the Senate followed the adoption of the recommendations of its Committee on Local and Foreign Debts chaired by Senator Shehu Sani (Kaduna, APC).

But before the loan request was approved, the Deputy President of the Senate, Senator Ike Ekweremadu, who presided over Tuesday’s plenary, had charged the DMO to monitor Nigeria’s debt profile to ensure it remains within acceptable limits.

“Let me state clearly that this Senate will continue to partner with the federal government on matters that concern the ordinary people of Nigeria. The implementation of the 2017 budget is key because any Appropriation Act that is not implemented is worthless,” he said.

Senator Yusuf Abubakar Yusuf (Taraba APC) said while borrowing to refinance local debt could be deemed a good model, the government must be careful as its workability would depend on Nigeria’s foreign reserves and exchange rate stability.

“If our foreign exchange rate is very low, if it fall as low as N500 to a dollar, we are going to have a very serious challenge generating enough foreign exchange to pay our foreign debt.

“We have to be seen to be a lot more cautious, not just saying that the interest rate (for external borrowing) is low and the cost of refinancing the loan will be low.

“We must also take cognisance of the fact that whatever happens will have an impact on our foreign exchange rate,” Yusuf said.

Also contributing to the debate, Senator Gbenga Ashafa (Lagos APC) said the loan was critical to the success of the 2017 budget.

“If we consider the projects that these loans are supposed to fund, they are spread across all the geopolitical zones. They covers power, rail, roads, water and others,” he said.

Last October, President Muhammadu Buhari had sought expeditious approval of the foreign loan request.

Some of the projects to be funded from the loans include the Mambilla hydropower project, second runway at the Nnamdi Azikiwe International Airport, Abuja, counterpart funding for rail projects, and the construction of the Bodo-Bonny road.

Also at plenary Tuesday, the Senate mandated its Committees on Finance and Banking, Insurance and Financial Institutions to investigate allegations of unremitted revenue from stamp duties in the last five years.

This, it said, was due to the need to harness all sources of revenue to the government and curb all forms of wastefulness, corruption and diversion of funds.

The resolution followed a motion sponsored by Senator John Owan Enoh (Cross River, PDP) and 11 others who expressed concern over report by the School of Banking Honours that showed that over N7 trillion in stamp duties from cashless transactions remained unpaid to the federation since 2015.

The motion stated: “Worried that the provision for stamp duty in the revenue framework of the nation’s annual budget for 2015, 2016 and 2017 had been N8.713 billion, N66.138 billion and N16.96 billion, respectively despite the above report.

“We have been apprised of the anti-stamp duties collection stance of the Nigerian inter-Bank Settlement System (NIBSS) which is currently being accused of systemic diversion of huge revenue flows from stamp duty collection on electronic transfer receipts on online banking transactions and the necessity to demand notice on all unremitted stamp duties.”

Owan also queried how the projection on stamp duties dropped from N66 billion in 2016 to N16.9 billion in 2017.

Adopting the prayers of the motion, the Senate commended the School of Banking Honours for bringing the issue of unremitted revenue from stamp duties to the public’s notice, and for insisting on probity of the NIBSS.

The School of Banking Honours is a body corporate approved through registration by the Nigerian Copyrights Commission, to research into banking operations, facilitate collaboration between banks, ensure collaboration between banks and the government, and represent the government in facilitating the imposition and monitoring of stamp duties on all electronic cash transactions.

Total Debt Rises to N20tn

Meanwhile, data released Tuesday by the DMO has shown that Nigeria’s total public debt stock, comprising the federal government, states and the Federal Capital Territory (FCT) stood at N20.373 trillion as of September 30, showing a marginal increase of 3.6 per cent from N19.637 trillion as of June 30.

A breakdown of the country’s debt stock, according to a statement, indicated that domestic debt accounted for 76.96 per cent of the total debt stock while external debt accounted for 23.04 per cent.

The DMO put the domestic debt stock at N15.679 trillion, an increase of 4.1 per cent compared with N15.034 trillion as of June 30.

On the other hand, external debt stock stood at N4.694 trillion ($15.390 billion), reflecting a marginal rise of 1.9 per cent from N4.602 trillion as of June 30.

“The debt data lends credence to the government’s claims that the public debt stock is skewed in favour of domestic debt which is partly responsible for the high debt service figures,” the statement explained.

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.

Continue Reading
Comments

Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

Published

on

Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

Continue Reading

Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

Published

on

Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

Continue Reading

Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

Published

on

Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending