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National Assembly Raises 2018 Budget by N508bn

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  • National Assembly Raises 2018 Budget by N508bn

The National Assembly has raised the 2018 budget by over N508bn, bringing it to N9.12tn.

The original estimates presented to the legislature on November 7, 2017 by President Muhammadu Buhari totalled N8.612tn.

The new budget size was contained in the report of the joint Senate and House of Representatives Committee on Appropriation laid before lawmakers in Abuja on Tuesday.

The crude oil benchmark price of the budget was also increased from $45 to $50.5.

The benchmark alteration confirmed on May 1, 2018 that lawmakers had proposed to increase the benchmark because of the steady rise in the global price of crude.

From about $50 per barrel in November 2017 when Buhari laid the budget estimates, lawmakers noted that the crude oil price had jumped to around $80.

At the House of Representatives, the Chairman, Committee on Appropriation, Mr. Mustapha Bala-Dawaki, presented the report to the House session, which was presided over by the Deputy Speaker, Mr. Yussuff Lasun, on Tuesday.

Lasun announced that the budget would be passed today (Wednesday).

He asked members to pick copies of the report as early as 8 am and read it, preparatory to the consideration and passage of the budget.

“Get your copies as from 8 am so that by afternoon, we will begin to pass the budget. This announcement is very important, because we will adjourn the House on Thursday to go for the APC congresses”, the deputy speaker informed his colleagues.

There are other changes to the original document as contained in the National Assembly report, different from Buhari’s proposals.

In the President’s estimates, the recurrent expenditure was captured as N3.494tn. But in the new report, it was raised to N3.516tn.

Similarly, the development fund for capital expenditure was raised to N2.869tn from the N2.652tn proposed by the President on November 7.

The provision for statutory transfers also rose to N530.421bn from N456bn.

Debt servicing provision rose to N2.203tn from N2.014tn. The new figure includes the N190bn for the “Sinking Fund.”

However, the naira/dollar exchange rate was retained at N305 to $1.

The daily crude oil production was also retained at 2.2 million barrels.

Also, the Senate on Tuesday received the report on the 2018 Appropriation Bill from the Committee on Appropriations and might pass the budget today (Wednesday).

The Chairman of the committee, Senator Danjuma Goje, laid the report before the Senate at the plenary on Tuesday.

The Chairman of the Senate Committee on Media and Public Affairs, Senator Aliyu Sabi-Abdullahi, had on different occasions said the budget would be passed after the report was presented.

‘We’ll pass remaining parts of PIB in July’

Meanwhile, the ad hoc committee of the House on the Petroleum Industry Bill started a public hearing on the three remaining parts of the PIB on Tuesday.

The committee, which, is chaired by the Chief Whip of the House, Mr. Alhassan Ado-Doguwa, presented the three bills.

They are the Petroleum Industry Fiscal Bill, 2018; Petroleum Producing Host and Impacted Communities Bill, 2018; and Petroleum Industry Administration Bill, 2018.

The National Assembly has already passed the Petroleum Industry Governance Bill, 2017, now awaiting the assent of Buhari.

The Speaker of the House, Mr. Yakubu Dogara, who opened Monday’s hearing, disclosed that by July, the three bills would have been passed.

“We are ready to pass these bills before proceeding on our annual recess. The commitment is there to make a break from the delays of the past years,” Dogara assured the session.

On his part, Ado-Doguwa gave reasons why the current 8th Assembly opted to split the PIB into four parts.

He explained that in the past, the PIB suffered setbacks because all the issues were rolled into one bill.

Ado-Doguwa recalled that some of the issues generated controversies and resulted in the entire bill being rejected.

He stated that this time round, the issues were separated in the four bills so that they would be adequately addressed on their merits.

He added, “You are aware that the PIGB has since been passed by this legislature. These remaining three bills are already on course and we are looking forward to passing them as well.

“In this way, we will have separate bills, each addressing a particular oil industry issue in order to avoid the pitfalls of the past.”

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu; and the Group Managing Director, Nigerian National Petroleum Corporation, Dr. Maikanti Baru, were absent at the hearing on Monday.

Commenting on their absence, Dogara said it showed the seeming lack of interest of the executive arm of government in having the PIB in place.

“I can see that the minister and the NNPC boss are not represented here. That is not a problem. On our part, we have resolved that before we break for our annual recess, we will pass these bills”, the speaker said.

FG has capacity to implement N9.1tn budget – Experts

Finance and economic experts said that the N9.1tn budget size was implementable.

Those who spoke to one of our correspondents in separate telephone interviews were the Registrar, Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi; a former Director-General, Abuja Chamber of Commerce and Industry, Mr. Chijioke Ekechukwu; and a developmental economist Odilim Enwagbara

Eohoi said in view of the fact that oil prices had been on the upward trend in recent times coupled with the aggressive tax revenue drive of the Federal Government, implementing a budget of that size would not be too difficult.

He stated, “It will be possible to finance the budget of N9.1tn because looking at the oil price, it was at $50 to a barrel when the budget was presented, but now it’s selling for above $70 per barrel. So, it is still within acceptable limit for the lawmakers to raise the benchmark to $50 per barrel.

“There are other windows available for the government to generate more revenue considering the aggressive drive to raise tax revenue from six per cent of the GDP to 15 per cent. So, I think the budget is implementable by the government.”

Enwagbara said at N9.1tn, the Federal Government’s budget was still low compared to the country’s GDP size.

He noted that for the budget to make any significant impact, it must be raised to about 10 per cent of the GDP.

He stated, “Nigeria’s budget is for consumption and what they did is to increase the capital portion of the budget. But I believe we should also raise the budget benchmark price from the $50 proposed by the lawmakers to $80 per barrel to enable us to deploy more revenue to fund the budget.

“The budget should be increased further to about 10 per cent of our GDP because we have one of the lowest budgets in the world. When South Africa is budgeting about $200bn, Nigeria has about $28bn budget for the year, this is very low for us as a country.”

Ekechukwu, on his part, stated, “The increase in the budget figures by the National Assembly can be absorbed by the expected revenue from oil and other sectors.

“This revenue expectation does not obliterate the deficit end of the budget, which will still be funded by debts. Much as the debt profile of Nigeria is rising every day, the debt to the GDP ratio is still not above any tolerable benchmark.

“As far as the increase is not arising from indiscriminate and arbitrary increase for selfish gains, the budget will be implementable.”

An economic expert and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the expected increase in revenue on the back of rising oil prices should either be used to reduce government borrowing or be channelled entirely to capital projects rather than increasing recurrent expenditure, debt servicing and statutory transfers.

He stated, “If the government is projecting an increase in revenue, that increase in revenue should have been used to bring down the amount that it is going to borrow in the fiscal year, and subsequently bring down the debt service costs. That way, the government would have had a more prudent fiscal budget.

“What will be the motivation for increasing the statutory transfers? It simply means that more money is going to the National Assembly, because part of the statutory transfers goes to the National Assembly, the judiciary and some agencies of government that are self-accounting. I think ordinarily, everybody in the National Assembly should be focused on having a more prudent financial position for the Federal Government.”

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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South Africa’s Inflation Rate Holds Steady in May

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South Africa’s inflation rate remained unchanged in May, increasing the likelihood that the central bank will maintain current borrowing costs.

According to a statement released by Statistics South Africa on Wednesday, consumer prices rose by 5.2% year-on-year, the same rate as in April.

The consistent inflation rate is expected to influence the decision of the six-member monetary policy committee (MPC), which is set to meet in mid-July. The current benchmark rate stands at 8.25%, a 15-year high, and has been held steady for six consecutive meetings.

Central Bank Governor Lesetja Kganyago has repeatedly emphasized the need for inflation to fall firmly within the 3% to 6% target range before considering any reduction in borrowing costs.

“We will continue to deliver on our mandate, irrespective of how our post-election politics plays out,” Kganyago stated earlier this month in Soweto. “The only impact is what kind of policies any coalition will propose. If the policies are not sustainable, we might not have investment.”

While money markets are assigning a slim chance of a 25-basis point rate cut in July, they are fully pricing in a reduction by November.

Bloomberg Africa economist Yvonne Mhango anticipates the rate-cutting cycle to begin in the fourth quarter, supported by a sharp drop in gasoline prices in June and a rally in the rand.

The rand has appreciated more than 3% since Friday, following the ANC’s agreement to a power-sharing deal with business-friendly opposition parties and the re-election of President Cyril Ramaphosa.

In May, the annual inflation rates for four of the twelve product groups remained stable, including food and non-alcoholic beverages.

However, transport, alcoholic beverages and tobacco, and recreation and culture saw higher rates. Food prices increased by 4.3% in May, slightly down from 4.4% in April, while transport costs rose by 6.3%, up from 5.7% and marking the highest rate for this category since October 2023.

The central bank’s cautious stance on monetary policy reflects its ongoing concerns about inflation.

Governor Kganyago has consistently voiced worries that the inflation rate is not decreasing as quickly as desired. The MPC’s upcoming decision will hinge on sustained inflationary pressures and the need to balance economic stability with fostering growth.

As South Africa navigates its economic challenges, the steady inflation rate in May provides a measure of predictability for policymakers and investors alike.

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Ghana Reports Strong 4.7% GDP Growth in First Quarter of 2024

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Ghana’s economy showed impressive growth in the first quarter of 2024 with the Gross Domestic Product (GDP) expanding by 4.7% compared to the same period last year, according to Government Statistician Samuel Kobina Annim.

This represents an increase from the 3.8% growth recorded in the previous quarter and should provide a much-needed boost to the ruling New Patriotic Party (NPP) as the nation approaches the presidential elections scheduled for December 7.

The positive economic data comes amidst a challenging backdrop of fiscal consolidation efforts under a $3 billion International Monetary Fund (IMF) rescue program.

The government has been working to control debt through reduced spending and restructuring nearly all of its $44 billion debt.

This includes ongoing negotiations with private creditors to reorganize $13 billion worth of bonds.

The latest GDP figures are seen as a vindication of the NPP’s economic policies, which have been under fire from the main opposition party, the National Democratic Congress (NDC).

The opposition has criticized the government’s handling of the economy, particularly its fiscal policies and the terms of the IMF program, arguing that they have imposed undue hardship on ordinary Ghanaians.

However, the 4.7% growth rate suggests that the measures taken to stabilize the economy are beginning to yield positive results.

Analysts believe that the stronger-than-expected economic performance will bolster the NPP’s position as the country gears up for the presidential elections.

“The growth we are seeing is a testament to the resilience of the Ghanaian economy and the effectiveness of the government’s policies,” Annim stated at a press briefing in Accra. “Despite the constraints imposed by the debt restructuring and IMF program, we are seeing significant progress.”

The IMF program, which is designed to restore macroeconomic stability, has necessitated tough fiscal adjustments.

These include cutting government expenditure and implementing structural reforms aimed at boosting economic efficiency and growth.

The government’s commitment to these reforms has been crucial in securing the confidence of international lenders and investors.

In addition to the IMF support, the government has also been focused on diversifying the economy, reducing its reliance on commodities, and fostering sectors such as manufacturing, services, and technology.

These efforts have contributed to the robust growth figures reported for the first quarter.

Economic growth in Ghana has been uneven in recent years, with periods of rapid expansion often followed by slowdowns.

The current administration has emphasized sustainable and inclusive growth, seeking to ensure that the benefits of economic progress are widely shared across all segments of the population.

The next few months will be critical as the government continues its efforts to stabilize the economy while preparing for the upcoming elections.

The positive GDP growth figures provide a strong foundation, but challenges remain, including managing inflation, creating jobs, and ensuring the stability of the financial sector.

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World Bank Commits Over $15 Billion to Support Nigeria’s Economic Reforms

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The World Bank has pledged over $15 billion in technical advisory and financial support to help the country achieve sustainable economic prosperity.

This commitment, announced in a feature article titled “Turning The Corner: Nigeria’s Ongoing Path of Economic Reforms,” underscores the international lender’s confidence in Nigeria’s recent bold reforms aimed at stabilizing and growing its economy.

The World Bank’s support will be channeled into key sectors such as reliable power and clean energy, girls’ education and women’s economic empowerment, climate adaptation and resilience, water and sanitation, and governance reforms.

The bank lauded Nigeria’s government for its courageous steps in implementing much-needed reforms, highlighting the unification of multiple official exchange rates, which has led to a market-determined official rate, and the phasing out of the costly gasoline subsidy.

“These reforms are crucial for Nigeria’s long-term economic health,” the World Bank stated. “The supply of foreign exchange has improved, benefiting businesses and consumers, while the gap between official and parallel market exchange rates has narrowed, enhancing transparency and curbing corrupt practices.”

The removal of the gasoline subsidy, which had cost the country over 8.6 trillion naira (US$22.2 billion) from 2019 to 2022, was particularly noted for its potential to redirect fiscal resources toward more impactful public investments.

The World Bank pointed out that the subsidy primarily benefited wealthier consumers and fostered black market activities, rather than aiding the poor.

The bank’s article emphasized that Nigeria is at a turning point, with macro-fiscal reforms expected to channel more resources into sectors critical for improving citizens’ lives.

The World Bank’s support is designed to sustain these reforms and expand social protection for the poor and vulnerable, aiming to put the economy back on a sustainable growth path.

In addition to this substantial support, the World Bank recently approved a $2.25 billion loan to Nigeria at a one percent interest rate to finance further fiscal reforms.

This includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, and $750 million for the NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR).

“The future can be bright, and Nigeria can rise and serve as an example for the region on how macro-fiscal and governance reforms, along with continued investments in public goods, can accelerate growth and improve the lives of its citizens,” the World Bank concluded.

With this robust backing from the World Bank, Nigeria is well-positioned to tackle its economic challenges and embark on a path to sustained prosperity and development.

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