On Tuesday, the senate received a request from President Muhammadu Buhari to approve adjustments to the 2022 fiscal framework.
The request was contained in a letter dated 5th April 2022. The letter was read during plenary by the Senate President, Ahmad Lawan.
Buhari, in the letter, explained that an adjustment to the 2022 fiscal framework became imperative in view of new developments in both the global and domestic economies.
According to him, the developments were occasioned by spikes in the market price of crude oil, caused by the ongoing Russian-Ukraine war.
“As you are aware, there have been new developments both in the global economy as well as in the domestic economy which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 Budget was based.
“These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.
“The decision to suspend the removal of Petroleum Motor Spirit subsidy at a time when high crude oil prices have elevated the subsidy cost has significantly eroded government revenues”, Buhari said.
The President, therefore, requested the upper chamber to approve an increase in the oil benchmark by US$11 per barrel, from US$62 per barrel to US$73 per barrel.
The President also sought a reduction in the projected oil production volume by 283,000 barrels per day, from the current target of 1.883 million barrels per day to 1.600 million barrels per day.
He also request the chamber to approve an increase in the estimated provision for PMS subsidy for 2022 by N442.72 billion from N3.557 trillion to N4 trillion.
Buhari stated the need to cut the provision for Federally-funded upstream projects being implemented by N200 billion, from N352.80 billion to N152.80 billion.
He also proposed an increase in the projection for Federal Government Independent Revenue by N400 billion; and an additional provision of N182.45 billion to cater to the needs of the Nigerian Police Force.
He added that “based on the above adjustments, the Federation Account (Main Pool) revenue for the three tiers of government is projected to decline by N2.418 trillion, while FGN’s share from the Account (net of transfer to the Federal Capital Territory and other statutory deductions) is projected to reduce by N1.173 trillion.”
He disclosed that the amount available to fund the FGN Budget is projected to decline by N772.91 billion due to the increase in the projection for Independent Revenue (Operating Surplus Remittance) by N400 billion.
He explained further that Aggregate Expenditure is projected to increase by N192.52 billion, due to increase in personnel cost by N161.40 billion and other service wide votes by N21.05 billion (both for the Nigeria Police Force), additional domestic debt service provision of N76.13 billion, and net reductions in Statutory Transfers by N66.07 billion.
Giving a breakdown, he said the net deductions would see a cut by N13.46 billion from N102.78 billion to N89.32 billion for NDDC; NEDC, by N6.30 billion from N48.08 billion to N41.78 billion; UBEC, by N23.16 billion from N112.29 billion to N89.13 billion; Basic Health Care Fund, by N11.58 billion from N56.14 billion to N44.56 billion; and NASENI, by N11.58 billion from N56.14 billion to N44.56 billion.
The President noted that the total budget deficit is projected to increase from N965.42 billion to N7.35 trillion, representing 3.99 percent of GDP.
According to him, the incremental deficit will be financed by new borrowings from the domestic market.
Buhari Expresses Confidence in Banking Institutions to Tackle Economic Challenges
President Muhammadu Buhari has expressed his confidence in the West African Banking Association (WABA) to tackle economic challenges in the West African region.
The president expressed his trust while receiving a team from WABA, led by its President, Thierno Seydou Nourou Sy, at the State House in Abuja.
The president stated that the sub-region needs to come to an agreement on low access to financial services and recovery from the COVID-19 pandemic.
According to him, the association, founded in 1981, brings together over 250 commercial banks and 15 institutions from across West Africa, and for many centuries, African countries have traded with one another without a formalized and structured system. He, however, noted that over time, global trade had become more complex and organized.
The president expressed optimism that the launch of the African Continental Free Trade Area will mark a watershed moment in the way African countries do business.
“More importantly, we will turn the page in ensuring that we deepen and expand our industrial capabilities by making sure we export less of what we have been endowed with in the primary or raw form, and convert larger portions of these resources into finished materials.
“That will allow us to benefit from the revenue earned from the added value of exporting a finished product,” he said.
“Our ability to overcome the current phase of our development lies in our resolve to work jointly via our regional and sub-regional organizations where we can all reach a common understanding to fight against a common enemy.
“This is one of the reasons I am delighted with the strides ECOWAS has been making towards unanimity and forging alliances with a goal to resolve issues that confront the sub-region.
“I believe that this is also the approach that is being followed in the West African Bankers’ Association and the West African Monetary Union,’’ he added.
While commenting on WABA’s ongoing attempts to synchronize monetary and fiscal policy, the president pushed the organization to find common ground despite the particular macroeconomic challenges that each member-state faces.
He pledged that Nigeria would always be ready to support efforts that are geared towards improving the lives of all its citizens “as long as they do not place us at a disadvantage.”
The WABA President praised Nigeria’s leadership role in the African economy, while also praising President Buhari’s leadership.
“That’s why we are here for counsel and guidance for the financial sector in West Africa,” he said. He further urged the president to be an advocate for the greater inclusion of WABA in the ECOWAS structure.
NGX Sheds 0.13% on Monday to Extend its Decline
The Nigerian Exchange Limited (NGX) extended its decline on Monday as investors exchanged 263,338,835 shares worth N3.549 billion in 4,549 billion.
The market value of all listed equities decreased by N37 billion from N28.562 trillion it closed on Friday to N25.525 trillion while NGX shed 0.13% to close at 52,911.51 index points on Monday.
Jaiz Bank led the most traded stocks with 114007816 shares worth N101,752,697.03. Followed by GTCO’s 12,872,851 shares valued N302,842,620.75. See other details below.
|CONOIL||N 31.15||N 34.25||3.10||9.95 %|
|MRS||N 13.60||N 14.95||1.35||9.93 %|
|MCNICHOLS||N 2.13||N 2.34||0.21||9.86 %|
|ACADEMY||N 1.23||N 1.35||0.12||9.76 %|
|NPFMCRFBK||N 1.87||N 2.02||0.15||8.02 %|
|PRESCO||N 200.00||N 180.00||-20.00||-10.00 %|
|GSPECPLC||N 3.41||N 3.07||-0.34||-9.97 %|
|NEIMETH||N 1.76||N 1.59||-0.17||-9.66 %|
|UACN||N 14.40||N 13.20||-1.20||-8.33 %|
|NEM||N 4.39||N 4.05||-0.34||-7.74 %|
Nigeria Raises Interest Rate by 150 Basis Points to 13%
The Central Bank of Nigeria (CBN) led Monetary Policy Committee on Tuesday unanimously agreed to raise interest rates by 150 basis points from 11.5% to 13% to rein in escalating consumer prices.
The apex Governor, Godwin Emefiele disclosed this while speaking to the media on Tuesday, May 24th, 2022.
In 2020, the committee cut interest by 50 basis points to 11.5% in September 2020 to encourage borrowing and deepen new investment to stir growth and halt the plunge in economic productivity during the peak of COVID-19.
The nine-member committee voted unanimously to keep Monetary Policy Rate (MPR) at 13% and others as follow:
- The asymmetric corridor of +100/-700 basis points around the MPR was retained
- CRR was retained at 27.5%
- While Liquidity Ratio was also kept at 30%
The increase may not be unconnected to Nigeria’s high inflation rate of 16.82% in April. The committee is now projecting an aggressive increase in the inflation rate due to the forthcoming general election.
Emefiele said the MPC is suspicious “there might be an aggressive accretion of inflation”. Therefore, to prevent the looming inflation, he said the committee had to raise the interest rate by 150 basis points.
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