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Nigeria owes World Bank Group $7.8b

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World Bank
  • Nigeria owes World Bank Group $7.8b

A new report has shown that Nigeria owes 51 per cent of its cumulative $15.35 per cent external debt to the World Bank Group.

A report by FBN Capital research titled: ‘External Debt Ratios to Savour’ said the Federal Government of Nigeria’s (FGN’s) external debt obligations at end-September amounted to $15.35 billion, equivalent of 3.9 per cent of 2016 Gross Domestic Product (GDP).

The investment and research firm said the increase over third quarter debt statistics amounted to just $300 million, consisting largely of disbursements by the soft loan windows of the World Bank and the African Development Bank, and by the Agence Française de Développement (the French state investment bank).

Nigeria will next month be raising $3 billion from the Eurobond market to help fund part of the 2017 budget. “The point to be made, amid some uninformed commentary about the FGN’s return this month to the Eurobond market to raise $3 billion, is that concessional loans are still available. The external debt stock of Angola, which has also been downgraded by Moody’s to B2, was an estimated 42 per cent of GDP in 2016,” it said.

The FBN Capital explained that annualising interest and fee payments made on Nigerian external debt in the third quarter would bring external debt service to 4.3 per cent on the basis of mid-2017 stocks.

Also, the Office of the Accountant-General of the Federation (OAGF) data for first half of 2017 show domestic and external interest payments by the FGN at N872 billion and N56 billion respectively.

“The FGN has tapped the Eurobond market again to cover the larger part of its 2017 external borrowing target. If it is to tackle the structural flaws of the Nigerian economy, it has to borrow because transforming its non-oil revenue collection is at best a medium-term project. For reasons we have indicated and others, it makes sense to borrow externally,” it said.

The FGN’s next step is the externalisation of longer-tenor Nigerian Treasury Bills up to a ceiling of $3 billion, which has been approved by the National Assembly.

Data made available by the Debt Management Office (DMO) showed that Nigeria’s debt stock has hit N20 trillion – as at September 30.Domestic debt accounts for 76.96 per cent of this figure while foreign debt accounts for 23.04 per cent.

In figures, domestic debt stood at N15.679 billion, an increase of 4.1 per cent from the N15.034 trillion recorded in June. Foreign debt stood at N4.694 trillion, a rise of 1.9 per cent above the N4.602 trillion as at June 30.

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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Economy

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

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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.

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Economy

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

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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.

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Economy

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

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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.

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