Finance

Tinubu-Led Government Aims to Fulfill IMF Debt of $3.4 Billion

Published

1 month ago

August 19, 2023

The current administration under the leadership of Bola Tinubu is gearing up to fulfill a significant financial commitment as it approaches the final stretch of its tenure.

A debt of $3.4 billion owed to the International Monetary Fund (IMF), originating from an emergency financial assistance package disbursed in April 2020, is expected to be fully repaid.

However, a recent investigation into the financial position of Nigeria within the IMF, as disclosed on the organization’s official website, reveals that an outstanding sum of $3.19 billion remains.

The loan in question was initially granted by the IMF in response to the economic upheaval triggered by the COVID-19 pandemic. Approved by the IMF’s Executive Board on April 28, 2020, under the Rapid Financing Instrument, the loan was intended to address the severe economic repercussions of the pandemic as well as the drastic drop in oil prices that the country experienced.

“In light of the COVID-19 shock and the sharp fall in oil prices, the IMF approved $3.4 billion in emergency financial assistance under the Rapid Financing Instrument to support the authorities’ efforts,” stated a release from the IMF at the time of the loan disbursement.

It has been revealed that the disbursed amount represented only one of the four loans initially agreed upon. The remaining payments were contingent on certain terms being met.

The breakdown of the repayment schedule indicates that Nigeria is expected to make annual payments in Special Drawing Rights (SDR), an international reserve asset established by the IMF. As per the latest available exchange rate, SDR1 equates to $1.33.

For the year 2023, Nigeria’s anticipated payment is SDR373.81 million ($497.17 million), encompassing both principal (SDR306.81 million/$408.06 million) and interest fees (SDR67 million/$89.11 million). The repayment obligation for 2024 amounts to SDR1.32 billion ($1.76 billion), split between a principal fee of SDR1.23 billion ($1.64 billion) and an interest fee of SDR94.76 million ($126.03 million). In the subsequent year, 2025, Nigeria’s total payment is projected to be SDR650.58 million ($865.27 million), made up of a principal fee of SDR613.63 million ($816.13 million) and an interest fee of SDR36.95 million ($49.14 million).

The repayment plan also includes the years 2026 and 2027, where only an interest fee of SDR25.56 million ($33.99 million) is due each year. Notably, the repayment period has been extended to 2027 from the initial 2026 timeframe that was previously reported.

In sum, the current administration’s obligation to the IMF stands at $3.19 billion, indicating that the previous administration had likely repaid around $320 million of the total loan.

The Central Bank of Nigeria (CBN) referenced the IMF loan in its 2022 financial statements, clarifying that the bank had arranged the rapid financing instrument with the IMF on behalf of the Federal Government. The loan, designed with a 5-year tenure and a 2-year moratorium, carries an interest rate of 1% per annum. The CBN further emphasized that the responsibility for repaying the IMF loans and associated charges rests with the bank.

As the current administration works diligently to fulfill this financial commitment, the nation watches closely to see the completion of this critical repayment to the IMF.

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Banking Sector

Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting

Published

18 hours ago

September 22, 2023

Investors King

The Central Bank of Nigeria (CBN) has announced the postponement of its 293rd Monetary Policy Committee (MPC) meeting, originally scheduled for September 25th and 26th, 2023.

Dr. Isa AbdulMumin, the bank’s Director of Corporate Communications, released a statement on Thursday confirming the decision.

In the statement, Dr. AbdulMumin stated, “The Monetary Policy Committee of the Central Bank of Nigeria has deferred its 293rd meeting, which was initially planned for Monday and Tuesday, September 25th and 26th, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”

While the CBN did not provide an official reason for the postponement, some industry experts suggest it may be related to the pending approvals for the newly appointed governor and deputy governors of the bank.

President Bola Tinubu recently nominated Yemi Cardoso as the potential head of the CBN. Additionally, Tinubu has endorsed the nominations of four new deputy governors for the apex bank, who are expected to serve for an initial term of five years, pending confirmation by the Senate.

The nominated deputy governors are Emem Usoro, Muhammad Abdullahi-Dattijo, Philip Ikeazor, and Bala Bello. However, the appointment of the CBN governor is contingent upon Senate confirmation, which is currently on a yearly recess.

The CBN assures stakeholders and the public that the rescheduled MPC meeting date will be communicated promptly as soon as it is confirmed.

Banking Sector

Currency in Circulation Surges by N1.7 Trillion Amidst Rising Cash Transactions

Published

19 hours ago

September 22, 2023

Investors King

The currency in circulation in Nigeria has surged by N1.7 trillion, driven by a surge in cash transactions.

According to data obtained from the Central Bank of Nigeria (CBN), as of the end of August, the currency in circulation rose to N2.7 trillion.

This substantial increase in currency in circulation comes after a 235.03 percent dip to N982.1 billion as of the end of February 2023 from N3.29 trillion at the close of October 2022, primarily due to the naira redesign policy spearheaded by the CBN.

However, the currency in circulation began its steady ascent once the policy concluded. Cash that had been previously withdrawn from circulation to promote electronic payments was reintroduced into the economy, contributing to this significant boost.

The data obtained from the CBN reveals that a whopping N2.3 trillion was removed from circulation during this period.

The CBN defines currency in circulation as all legal tender currency in the hands of the general public and within the vaults of Deposit Money Banks, excluding the central bank’s vaults.

The CBN further elucidated its methodology, stating that it employed an “accounting/statistical/withdrawals & deposits approach” to calculate the currency in circulation in Nigeria. This approach meticulously tracks the movement of currency in circulation on a transaction-by-transaction basis.

Under this methodology, each withdrawal made by a Deposit Money Bank at one of CBN’s branches results in an increase in currency in circulation (CIC), while each deposit made by a DMB at one of CBN’s branches leads to a decrease in CIC.

This surge in currency in circulation reflects the evolving landscape of financial transactions in Nigeria and underscores the importance of flexible monetary policies in facilitating economic growth and stability.

Finance

Oyo/Osun Customs Command Exceeds Revenue Target, Collects N47.4 Billion in Nine Months

Published

2 days ago

September 21, 2023

Samed Olukoya

The Oyo/Osun Area Command of the Nigeria Customs Service has reported a better-than-expected achievement in revenue collection, exceeding its targets while also making significant seizures of prohibited goods.

Outgoing Customs Area Comptroller, Babajide Jaiyeoba, made this announcement during the recent handover ceremony at the command in Ibadan, Oyo State.

Between January and September, the command generated N47.4 billion in revenue, according to Jaiyeoba. The customs area comptroller attributed this success to the dedicated officers and their unwavering professionalism, urging them to continue working as a cohesive team within the bounds of the law.

Under his leadership, the command also made seizures of prohibited goods valued at N308 million over the past nine months, a testament to their commitment to suppressing smuggling and upholding the customs regulations. Moreover, the command surpassed its revenue target set for the year 2022.

In a smooth transition of leadership, Ben Oramalugo assumed office as the new Comptroller. He emphasized the core duties of customs officers, which include revenue generation, trade facilitation, and the suppression of smuggling. Oramalugo pledged to uphold these mandates and called upon all officers to extend their cooperation to him as they did to his predecessor.

With these recent achievements and a committed leadership transition, the Oyo/Osun Area Command of the Nigeria Customs Service is well on its way to achieving even greater heights in revenue collection and ensuring compliance with customs regulations.