- Dump Multiple Exchange Rates, Forex Curbs, IMF tells FG
The International Monetary Fund on Thursday urged the Federal Government to lift the remaining foreign exchange restrictions and scrap the system of multiple exchange rates in order to revive the Nigerian economy.
The recommendation came in the Washington-based fund’s regular assessment of Nigeria’s economy.
The report came on the heels of a recent visit by a team of the IMF officials to Nigeria to assess the economy.
In a statement released on its website and titled: ‘IMF Executive Board concludes 2017 Article IV consultation with Nigeria’, the fund emphasised that stronger macroeconomic policies were urgently needed to rebuild confidence and foster economic recovery in the country.
It read in part, “Directors underscored that external adjustment is necessary to protect foreign currency buffers and reduce vulnerabilities. They commended the recent easing of some exchange restrictions and urged the authorities to remove the remaining restrictions and multiple currency practices, thus unifying the foreign exchange market and helping regain investor confidence.
“Directors emphasised that these policies should be supported by tighter monetary policy and fiscal consolidation to anchor inflation expectations and to limit the risk of exchange rate overshooting, as well as structural reforms to improve competitiveness.”
While commending the Central Bank of Nigeria’s efforts to keep the country’s banks afloat, the IMF stated that the issue of declining asset quality in the financial services industry must be urgently addressed.
It stated, “Directors welcomed the steps to strengthen banking sector’s resilience through stronger prudential requirements. With asset quality declining, they recommended further intensifying bank monitoring, enhancing contingency planning, and strengthening resolution frameworks.
“Directors encouraged quickly increasing the capital of undercapitalised banks and putting a time limit on regulatory forbearance.”
The IMF said it recognised that the Nigerian economy had been negatively impacted by low oil prices and production.
It commended the efforts already made by the Federal Government to reduce vulnerabilities and enhance resilience, including increasing fuel prices, raising the Monetary Policy Rate, and allowing the exchange rate to depreciate.
However, in the light of the persisting internal and external challenges, the fund emphasised that stronger macroeconomic policies were urgently needed to rebuild confidence and foster economic recovery.
It said, “Directors welcomed the authorities’ Economic Recovery and Growth Plan, which focuses on economic diversification driven by the private sector, and government initiatives to strengthen infrastructure, including the recently adopted power sector recovery plan. However, they underlined that without stronger policies, these objectives may not be achieved.
“Directors generally emphasised the need for a front-loaded, revenue-based fiscal consolidation starting in 2017, to reduce the Federal Government’s interest payments-to-revenue ratio to sustainable levels. They underscored that priority should be given to increasing non-oil revenue, including through raising VAT and excise rates, strengthening compliance, and closing loopholes and exemptions.”
It added, “Administering an independent fuel price-setting mechanism to eliminate fuel subsidies, strengthening public financial management, and developing a well-targeted social safety net would also support the adjustment. Directors stressed the need to contain the fiscal deficit of state and local governments, including through improved transparency and monitoring.
“Directors emphasised that ambitious structural reforms are key to achieving a competitive, investment-driven economy that is less dependent on oil. Priority should be given to improving infrastructure, enhancing the business environment, improving access to financing for small enterprises, and strengthening governance and anti-corruption efforts. Timely and effective implementation of these measures would promote sustainable and inclusive growth.”
A staff report, an accompanying document seen by Reuters and addressed to the IMF’s executive board, outlined a raft of failings in Nigeria’s handling of its economy.
The World Bank has been in talks with the Federal Government for more than a year over an application for a loan of at least $1bn and the African Development Bank has $400m on offer. But talks have stalled over economic reforms.
Nigeria’s economy contracted by 1.5 per cent last year.
“Under unchanged policies, the outlook remains challenging,” the report stated, adding that growth would “pick up only slightly” to 0.8 per cent this year, mostly reflecting some recovery in oil production.
The fund noted that the country’s fiscal deficit increased to 4.7 per cent of the Gross Domestic Product in 2016, up from 3.5 per cent in 2015, due to revenue shocks.
Leaked Documents Reveal Money Laundering Scam Worth $2tn
Several leaked documents have revealed how the world’s biggest banks enable criminals to launder money around the world.
The documents showing about $2tn of transactions are popularly called FinCEN files.
The BBC reports that the FinCEN files are more than 2,500 documents, most of which were files that banks sent to the US authorities between 2000 and 2017. They raise concerns about what their clients might be doing.
The documents are utilised by the banks to report suspicious behaviour. However, they may not be proof of wrongdoing or crime, the report said.
The Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury is saddled with the task of analysing information about financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes.
The FinCEN files revealed how top tier banks such as HSBC, JP Morgan, Barclays Bank, Deutsche Bank, Standard Chartered amongst others helped highly connected individuals move money round several accounts in the world.
JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it.
One of Russian President Vladimir Putin’s closest associates used Barclays Bank in London to avoid sanctions which were meant to stop him using financial services in the West.
Some of the cash was invested in works of art, the report added.
UK Banks to Ditch Clients Across Europe
UK banks are “outrageously failing” many tens of thousands of expat clients across Europe as they plot to shut their accounts and cancel credit cards within weeks due to post-Brexit rules.
This is the damning assessment of Nigel Green, the CEO and founder of deVere Group, one of the world’s largest financial advisory and fintech organisations, as most of Britain’s biggest banks send letters to customers in the EU warning them that all services are to be scrapped unless they have a UK address.
Mr Green says: “Most of the UK’s high street banks are plotting to unceremoniously abandon their customers across Europe within weeks.
“Accounts will be shut and debit and credit cards voided – regardless of how much or how little you have in those accounts or how long you have been a client – as it becomes illegal for UK banks to service British customers living in the EU without applying for new banking licences.”
He continues: “Once again, traditional banks are outrageously failing their clients who now need to take urgent steps to continue to be able to access, use, and manage their money.
“The move by these banks will be a major inconvenience to many tens of thousands of Brits living in the EU.”
Before post-Brexit rules come into effect, those affected are being urged to find alternatives to avoid potentially serious financial disruption.
“I would urge expats to now seek a financial services provider that already operates under pan-European rules,” says the deVere Group CEO.
In 2017 the firm launched deVere Vault. deVere Vault provides borderless global services with a ground-breaking e-money app and a single card, multi currency service designed with those with an international lifestyle in mind.
“You’re able to open a deVere Vault account in around five minutes, withdraw money from any cash machine worldwide, get real-time notifications with all your transactions, spend money on the card wherever Mastercard is accepted, and send and receive money in most major currencies,” notes Mr Green.
He concludes: “deVere Vault meets a growing need in an increasingly globalised world for our clients to have borderless access to and use of their money.
“Agile, tech-driven challenger banks and fintech firms are ready to fill the void left by traditional banks who are now having to routinely ditch their customers.”
NNPC Says Private Investors Will Finance Rehabilitation of Downstream Assets
Private Investors to Finance NNPC Rehabilitation of Downstream Assets
The Nigerian National Petroleum Corporation (NNPC) during the weekend said a group of private investors would finance the proposed rehabilitation and replacement of its aging downstream assets, especially petroleum pipelines, across the nation.
In a statement released in Abuja, the Group Managing Director, Mallam Mele Kyari, said some of the assets to be replaced were as old as 40 years and long overdue for replacement.
The managing director explained that the investors to be engaged would be doing the financing under the Finance, Build, Operate and Transfer, BOT, Model, adding that the model became imperative given the state of the nation’s downstream infrastructure.
He said: “Some of these assets are as old as 40 years and they are due for replacement; and when you want to do a replacement of this scale, you do need a lot of resources.
“And we know that we require these assets so we decided that we bring in private partners who will fund these pipelines, they will construct it, they will operate it with us and then ultimately they will fully recover their investment from the tariff which we will pay for using these pipelines. And as soon as they recover their cost and their margin, they will hand over these assets back to us.”
According to the NNPC boss, no fewer than 78 firms have already submitted virtual bids indicating their willingness to undertake the rehabilitation of the downstream pipelines, associated depots and terminal infrastructure of the NNPC through the financing model.
He added that the final partners would be selected by the end of the first quarter of 2021.
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