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Economy

External Debt Rises by $15.3bn Under Buhari

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Forex Weekly Outlook March 6 - 10
  • External Debt Rises by $15.3bn Under Buhari

The nation’s external debt stock rose by 148 per cent in almost four years of the President Muhammadu Buhari administration, data from the Debt Management Office showed.

The external debt soared to $25.61bn on March 31, 2019 from $10.32bn on June 30, 2015, according to the DMO.

Eurobonds worth $10.87bn accounted for the largest chunk of the external debt, as it rose by 625 per cent from $1.5bn on June 30, 2015.

The debt owed to the World Bank rose to $8.90bn from $6.19bn in the period under review.

China, through its Export-Import Bank of China, is the third biggest lender to Nigeria with a loan of $2.55bn as of March 31, 2019, up from $1.39bn as of June 30, 2015.

Other lenders are African Development Bank ($1.25bn), African Development Fund ($834.18m), Arab Bank for Economic Development in Africa ($5.88m), Export Development Fund ($59.15m), Islamic Development Bank (15.51m) and the International Fund for Agricultural Development ($176.19m).

Bilateral debts from France (Agence Française de Développement), Japan (Japan International Cooperation Agency), India Exim Banking of India and Germany (KfW) stood at $366.07m, $74.63m, $26.46m and $171.79m, respectively.

Financial and economic experts, who spoke with our correspondent in separate interviews, described the $15.3bn increase in the nation’s external debt as a cause for worry.

A former Director- General, West African Institute of Financial and Economic Management, Prof Akpan Ekpo, said the country’s debt profile had been increasing at an alarming rate.

He said, “The increase in external debt is something to worry about even though we have not exceeded the threshold and that was because we rebased our GDP. But what should worry us more is our debt servicing, which is increasing at a rate that is not comfortable. We should be cautious how we borrow, and let us know what we are borrowing for.

“I am not in support of Eurobond because it’s commercial and it has a higher rate. The World Bank and the ADB loans are flexible; if you cannot pay, you can renegotiate and the rates are lower. The multilateral institutions are better than Eurobonds because they will give you a long period of repayment. But we have to be very careful with the Chinese loans because the Chinese are very shrewd negotiators.”

The Managing Director and Chief Executive Officer, Financial Derivatives Company Limited, Mr Bismarck Rewane, said, “Part of our external reserves is borrowed money. We have borrowed but let us see the projects that the borrowings have been used to accomplish. But if they cannot show us the completed projects, then we have a problem.”

The DMO said last month that the Federal Government would borrow $2.7bn from foreign sources this year, adding that it planned to first access cheaper funding from multilateral and bilateral lenders while any balance would be raised from commercial sources, which might include securities issuance such as Eurobonds in the international capital market.

“As long as it is to finance projects, it is a good decision. But if it is to finance consumption, then we are in trouble,” Rewane said.

The nation’s external reserves stood at $45.109bn as of July 15, 2019, according to the Central Bank of Nigeria.

A professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella, who also raised concern over the significant increase in the external debt, said the government should be cautious about further borrowing.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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Petrol Importation - investorsking.com

The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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Economy

NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021

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Gas-Pipeline

The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.

This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).

The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.

It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.

NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.

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Economy

Nigeria’s Food Inflation Hits 22.95 Percent in March 2021

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food storage

Food inflation in Africa’s largest economy Nigeria rose by 22.95 percent in March 2021, the latest report from the National Bureau of Statistics (NBS) has shown.

Food Index increased at a faster pace when compared to 21.70 percent filed in February 2021.

Increases were recorded in Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetable, Fish, Oils and fats and fruits.

On a monthly basis, the food sub-index grew by 1.90 percent in March 2021. An increase of 0.01 percent points from 1.89 percent recorded in February 2021.

Analysing a more stable inflation trend, the twelve-month ended March 2021, showed the food index averaged 17.93 percent in the last twelve months, representing an increase of 0.68 percent when compared to 17.25 percent recorded in February 2021.

Insecurities amid wide foreign exchange rates and several other bottlenecks that impeded free inflow of imported goods were responsible for the surged in prices of goods and services in March, according to the report.

The Central Bank of Nigeria-led monetary policy committee had attributed the increase in prices to scarcity created by the intermittent clash between herdsmen and farmers across the nation.

However, other factors like unclear economic policies, increased in electricity tariffs, duties, subsidy removal and weak fiscal buffer to moderate the negative effect of COVID-19 on the economy continue to weigh and drag on new investment and expansion of local production despite the Federal Government aggressive call for improvement in domestic production.

Nigeria’s headline inflation rose by 18.17 percent year-on-year in the month under review.

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