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Buhari Gets Lawmakers’ Nod to Borrow N1tn From CBN’s WMAs

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President Muhammadu Buhari

President Muhammadu Buhari has obtained the approval of the House of Representatives, to access a fresh N1 trillion loan from the Ways and Means Advances (WMAs) by the Central Bank of Nigeria (CBN).

The Ways and Means Advances where the federal government can access funds is a loan facility by the CBN to finance the government during temporary budget shortfalls subject to limits imposed by law.

The President had in a letter he sent to the Senate and House of Representatives in December last year, requested the approvals of the National Assembly to its restructuring of N1tn WMAs, and another N22,719,703,774,306.90 loan from the CBN.

Upon reception of the letter, the duo of President of the Senate, Ahmad Lawan; and Speaker of the House, Femi Gbajabiamila, read out Buhari’s request to members of their respective chambers and the lawmakers had debated it.

President Buhari had titled the letter, ‘Restructuring of Ways and Means Advances,’ and explained that WMAs by the apex bank to the Federal Government is a funding option that caters for short-term or emergency finance to fund delayed government anticipated cash receipt of fiscal deficit.

Buhari had said that the WMAs balance as of December 19, 2022, is N23,719,703,774,306.90, adding that the N23.7tn loan would be repaid in forty years and that the moratorium on principal repayment is three years while the pricing interest rate is 9 per cent.

However, the House of Representatives during plenary on Tuesday okayed N1tn WMAs after receiving the recommendation by the Joint Committees on Finance; Banking and Currency; and Aids, Loans and Debts Management.

Because the report presented to the House by the Deputy Chairman of the House Committee on Finance, Musa Abdullahi, sought further explanation and convictions from the presidency on N22.7tn loan, the lawmakers rejected Buhari’s request for N22,719,703,774,306.90.

The committee had said it approved the N1tn because of its observations and the exigencies of the Federal Government current fiscal situation,

Similarly, the Senate opposed to Buhari’s request for the loan despite earlier assurances of the President of the Senate, Ahmad Lawan, to Buhari that the Senators would consider it.

Investors King had reported how CBN noted that the Federal Government’s excessive borrowing from the bank’s Ways and Means Advances (W&M) window could frustrate its monetary policy.

The apex bank had said that overdrafts due to the increasing reliance on the WMAs overdrafts would negatively impact its monetary policy.

Notwithstanding, the Federal Government had been running to the WMAs for any sign of budget deficit.

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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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