Economy

How FG’ll Raise N9.1tn to Fund 2018 Budget

Published

6 years ago

June 22, 2018

How FG’ll Raise N9.1tn to Fund 2018 Budget – Udoma

The Minister of Budget and National Planning, Udo Udoma, has explained how the N9.1tn revenue to finance the 2018 budget will be raised by the Federal Government.

Speaking during the public presentation of the 2018 budget on Thursday in Abuja, Udoma expressed optimism that the government would be able to generate enough revenue to finance its programmes as contained in the fiscal document.

The event was attended by the Minister of Finance, Mrs Kemi Adeosun; Minister of State for Budget and National Planning, Hajiya Zainab Ahmed; the Director-General, Budget Office of the Federation, Mr Ben Akabueze, and other top government officials.

The 2018 budget, which was designed to consolidate on the Economic Recovery and Growth Plan, was presented to the National Assembly on November 7, 2017.

It was passed by the lawmakers on May 16, 2018, transmitted to President Muhammadu Buhari on May 25 and assented by him on June 20.

The fiscal document signed by Buhari had a total proposed spending of N9.1tn, made up of N2.87tn for capital expenditure, N3.51tn for recurrent (non-debt) expenditure and N2.01tn projected to be spent on debt servicing.

Giving a breakdown of how the N9.1tn budget would be financed, Udoma said the sum of N2.99tn would be generated from oil revenue, N31.25bn would come from dividend to be received from the Nigerian LNG Limited, while N1.17bn was expected to be realised from minerals and mining revenue.

The minister stated that the Federal Government was targeting to generate N658.55bn from Companies Income Tax, N207.51bn from Value Added Tax, N324.86bn from Customs duties, while N57.87bn was expected to come from Federation Account levies.

In the same vein, he said the government was expecting N847.95bn as independent revenue from its agencies, while tax amnesty income, signature bonus and unspent balance from previous years would provide N87.84bn, N114.3bn and N250bn, respectively.

He also said the sum of N374bn was expected to be realised from domestic recoveries and fines, while N138.44bn would come from other Federal Government recoveries.

The minister added that the sum of N710bn would be realised from the sale of oil assets, while grants and donor funding would contribute N199.92bn.

He stated that N146.64bn would be realised from other unnamed revenue sources, while the budget deficit of N1.95tn would be financed through borrowing of N1.64tn.

The N1.64trn borrowing is made up of domestic borrowing of N793bn and foreign debt of N849bn.

In addition, the minister said about N306bn was expected from privatisation proceeds, while N5bn was projected to be realised from the sale of other government property to partly finance the deficit.

He noted that the government would be implementing some key reform initiatives contained in the ERGP in order to boost its revenue.

Some of them are deployment of new technology to improve revenue collection, upward review of tariffs and tax rates where appropriate, and stronger enforcement action against tax defaulters.

The government, according to Udoma, will improve the revenue performance of government-owned enterprises by reviewing their operational efficiency and cost-to-income ratios.

He said, “The 2018 revenue projections reflect new funding mechanism for Joint Venture operations, allowing for cost recovery in lieu of the previous cash call arrangement; and additional oil-related revenue, including royalty recovery, new/marginal field licences and early licensing renewals.

“Our journey out of the recent economic recession has helped us reset our priorities and to focus more on reforms and activities that have both short and long-term bearings on sustainable economic growth.

“In line with the ERGP, we are seeking to optimise derivable benefits from oil by restructuring our equity in JV oil assets while we intensify our efforts at accelerating economic diversification and non-oil revenue generation.”

The minister added, “Already, diversification efforts are yielding positive results with significant growth in the non-oil sector.

“Government will continue to create the enabling environment for the private sector to increase its investment and contribute significantly to job creation and economic growth.”

With the slashing of funds meant for the completion of key projects between this year and the next by the lawmakers, the implication, according to him, is that there may be a shift in their completion dates.

This, he noted, was because the available funds were insufficient to cater for the costs of the projects.

While calling for the cooperation of the legislature, Udoma noted that the Executive would soon approach them with a request for a readjustment of the already signed budget.

“We are determined to ensure that the budget is effectively implemented. We will work closely with the National Assembly where we need adjustment or a supplementary budget. We hope that they will cooperate with us,” he added.

Akabueze, on his part, promised that the 2018 budget would be the last time that the government would present the annual budget estimates to the National Assembly late.

He said the country would never experience any delay in the commencement of the budget under his watch as the DG of the Budget Office, adding that the development was slowing down the expected growth of the economy.

He noted that the understanding between the executive and legislature would be strengthened to accelerate a cordial working relationship.

Akabueze stated, “This event is holding just a day after the budget was signed, which underscores the seriousness we attach to what we are doing and also a sense of decency to which we must approach the vision of this project.

“This will be the last time, hopefully, that the Federal Government’s budget for any fiscal year will be delayed.”

In her presentation at the event, Ahmed debunked claims that the money meant for the Special Intervention Programme, including the home-grown school feeding programme, was mismanaged.

She explained that those who tried to sabotage the programme were caught and punished accordingly.

She said, “We run the programme in such a way that there are checks and balances. And there has been an attempt from different levels to short-change the programme, but because of the things we have put in place, we have easily found out and taken it up with security agencies, and we are trying to curb the challenges.”

“We have had some people that have been apprehended for short-changing the system.”

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

Fed Slashes Interest Rates by 0.5% to Steady Job Market and Inflation

Published

39 mins ago

September 18, 2024

Samed Olukoya

The Federal Reserve on Wednesday enacted its first interest rate cut since the early days of the Covid pandemic, slicing half a percentage point off benchmark rates in an effort to head off a slowdown in the labor market.

With both the jobs picture and inflation softening, the central bank’s Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, affirming market expectations that had recently shifted from an outlook for a cut half that size.

Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.

The decision lowers the federal funds rate to a range between 4.75%-5%. While the rate sets short-term borrowing costs for banks, it spills over into multiple consumer products such as mortgages, auto loans and credit cards.

In addition to this reduction, the committee indicated through its “dot plot” the equivalent of 50 more basis points of cuts by the end of the year, close to market pricing. The matrix of individual officials’ expectations pointed to another full percentage point in cuts by the end of 2025 and a half point in 2026. In all, the dot plot shows the benchmark rate coming down about 2 percentage points beyond Wednesday’s move.

“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the post-meeting statement said.

The decision to ease came “in light of progress on inflation and the balance of risks.” Notably, the FOMC vote was 11-1, with Governor Michelle Bowman preferring a quarter-point move. Bowman’s dissent was the first by a Fed governor since 2005, though a number of regional presidents have cast “no” votes during the period.

“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Chair Jerome Powell said at a news conference following the decision.

Trading was volatile after the decision with the Dow Jones Industrial Average jumping as much as 375 points after it was released, before easing somewhat as investors digested the news and considered what it suggests about the state of the economy.

Stocks ended slightly lower on the day while Treasury yields bounced higher.

“This is not the beginning of a series of 50 basis point cuts. The market was thinking to itself, if you go 50, another 50 has a high likelihood. But I think [Powell] really dashed that idea to some extent,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “It’s not that he thinks that’s not going to happen, it’s that he’s not he’s not pre-committing to that to happen. That is the right call.”

The committee noted that “job gains have slowed and the unemployment rate has moved up but remains low.” FOMC officials raised their expected unemployment rate this year to 4.4%, from the 4% projection at the last update in June, and lowered the inflation outlook to 2.3% from 2.6% previous. On core inflation, the committee took down its projection to 2.6%, a 0.2 percentage point reduction from June.

The committee expects the long-run neutral rate to be around 2.9%, a level that has drifted higher as the Fed has struggled to get inflation down to 2%.

The decision comes despite most economic indicators looking fairly solid.

Gross domestic product has been rising steadily, and the Atlanta Fed is tracking 3% growth in the third quarter based on continuing strength in consumer spending. Moreover, the Fed chose to cut even though most gauges indicate inflation well ahead of the central bank’s 2% target. The Fed’s preferred measure shows inflation running around 2.5%, well below its peak but still higher than policymakers would like.

However, Powell and other policymakers in recent days have expressed concern about the labor market. While layoffs have shown little sign of rebounding, hiring has slowed significantly. In fact, the last time the monthly hiring rate was this low – 3.5% as a share of the labor force – the unemployment rate was above 6%.

At his news conference following the July meeting, Powell remarked that a 50 basis point cut was “not something we’re thinking about right now.”

For the moment, at least, the move helps settle a contentious debate over how forceful the Fed should have been with the initial move.

Economy

Condemnations Trail Dangote-NNPCL Fuel Price Deal As Petroleum Crisis Persists

Published

6 hours ago

September 18, 2024

Ugwoke Ogbodo

There is widespread condemnation over the fuel price deal by the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL).

This is coming as some Nigerians have said that their hope of easing sigh of relief following the sector’s deregulation appeared to have been dashed as the price of the Premium Motor Spirit (PMS) commonly known as petrol has continued to hit the roof.

For the Minority caucus of the House of Representatives, the N980 per litre of pump price as agreed by NNPCL and Dangote Refinery is outrageous and exploitative.

Chairman of the caucus, Kingsley Chinda, said the development was a burden added to the already struggling Nigerians.

In a statement that he signed, the lawmaker expressed his outrage over the pump price that varies from N950 to N980 and above N1000 per litre depending on the parts of the country.

The statement said, “We find this pricing regime to be not only burdensome but utterly unacceptable, particularly in light of the fact that this fuel is refined locally.”

The lawmaker emphasised that locally refined fuel should be priced significantly lower than imported fuel, as it avoids costs such as landing charges and import duties, insisting that the pricing model was wrong for all intents and purposes.

“It appears Nigerians are unfairly exploited, especially at a time when many are facing severe economic challenges,” he said, urging NNPCL and Dangote Refinery to reconsider their stand in the interest of the poor masses.

The statement warned that allowing the current pricing arrangement to continue would only deepen the economic hardships of millions and erode trust in local refineries’ ability to deliver affordable fuel.

The caucus called on regulatory bodies and the government to urgently review the pricing framework to ensure Nigerians are not subjected to unsustainable fuel prices.

Also reacting, Senior Advocate of Nigeria and human rights activist, Femi Falana, condemned NNPCL for its role in setting the price of petrol, asserting that the actions of state oil companies are illegal and violate the Petroleum Industry Act (PIA).

In a statement, Falana cited Section 205 of the PIA, emphasising that the law requires petroleum prices to be determined by free market forces, not by the NNPCL.

He argued that the company’s involvement in price-setting contradicts the very deregulation process outlined in the law.

Economy

Ubeta Project to Produce 350 Million Standard Cubic Feet of Gas Per Day Once Operational – FG

Published

10 hours ago

September 18, 2024

Ugwoke Ogbodo

The Federal Government of Nigeria has said that once the Ubeta gas field is fully operational, it will produce 350 million standard cubic feet of gas per day.

With this dream realised, the Federal Government said the anticipated achievement would enhance energy security, attract investments, and strengthen collaboration with key partners.

This was made known by the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, at the inaugural US-Nigeria Strategic Energy Dialogue, hosted by the US State Department in Washington, DC.

Recall that the Nigerian National Petroleum Corporation (NNPC) Limited, in partnership with French energy giant TotalEnergies, had in July planned to invest a significant $550 million to develop gas facilities in oil-rich Rivers State.

Verheijen had announced the kickoff of a $550 million upstream gas project between Nigerian National Petroleum Corporation Ltd. (NNPCL) and TotalEnergies for the development of the Ubeta field.

At a luncheon during the dialogue, Verheijen mentioned that the upstream gas project would produce 350 million standard cubic feet of gas per day once operational.

A statement from Morenike Adewunmi, Stakeholder Manager, Office of the Special Adviser to the President on Energy, quoted Ms. Verheijen as informing the gathering that President Bola Tinubu’s major energy reforms since June 2023 have been aimed at enhancing energy security, attracting investments, and strengthening collaboration with key partners, including the US government.

According to her, the reforms have significantly improved the viability of Nigeria’s gas-to-power value chain.

She explained that in support of the reform efforts, the President issued five new executive orders designed to offer fiscal incentives for investment and reduce the cost and time required to finalize and implement contracts for developing and expanding gas infrastructure.

Verheijen said that the directives aim to immediately unlock up to $2.5 billion in new oil and gas investments in the country.

She acknowledged the valuable support of financing and technical partners, including the US government, the World Bank, and the African Development Bank, in efforts to expand electricity access and reliability through both grid and off-grid solutions.