The European Central Bank (ECB) in Brussels on Monday said it will take measures to ensure its monetary policy reaches the real economy if appears threatened by global financial downturn.
“In the light of the recent financial turmoil, we will analyze the state of transmission of our monetary impulses by the financial system and in particular by banks,” Mario Draghi told European Parliament lawmakers on Monday. He further stated that the organization will examine the impact of renewed declines in energy prices and “if either of these two factors entail downward risks to price stability, we will not hesitate to act.”
Discussing global economy, Draghi said that “a continuation of the rebalancing process is needed to secure sustainable growth over the medium term.” He also said this “could imply some headwinds in the short term, which will require close monitoring of the related risks.”
The Euro fell 1.1 percent to trade at $1.1135 against the US dollar, and bank stocks initially declined before recovering, the Euro Stoxx Banks Index gained 3.6 percent during the European Parliament’s Economic and Monetary Affairs Committee meeting.
“The fall in bank equity prices was amplified by perceptions that banks may have to do more to adjust their business models to the lower growth/lower interest-rate environment and to the strengthened international regulatory framework that has been put in place since the crisis,” he said. “However, we have to acknowledge that the regulatory overhaul since the start of the crisis has laid the foundations for durably increasing the resilience not only of individual institutions but also of the financial system as a whole.”
Even though investors are wary of bad loans still present at Italian lenders and political uncertainty over plans to reduce them, Draghi said euro-area banks are in a “good position” to bring down non-performing loans in an orderly manner over the next few years, and added that they won’t face additional legal capital requirements.
AfCFTA Must Be Backed by Legal Framework to Yield Desired Results -Lawan
For AfCFTA to Achieve Expected Results, it must be Backed With Legal Framework
Senate President, Ahmad Lawan, has said for the African Continental Free Trade Agreement (AfCFTA) to yield desired results, it must be backed by necessary legal frameworks, right policies and robust implementation.
The Senate President made the statement when the delegation from the African Continental Free Trade Area Secretariat led by Wamkele Keabetswe Mene visited him in Abuja.
Ahmad Lawan, who was represented by Prof Ajayi Boroffice, said Nigeria’s signed the AfCFTA agreement to benefit Africans and reduce the huge unemployment and underemployment facing the continent from South to West and East to North.
This high unemployment rate and underemployment rate, according to him, had led to the migration of some of Africa’s top brains and experts. He said the economies of African nations had been characterised by weak economic productivity, low efficiency and limited resources.
He described AfCFTA as “a step in the right direction for the growth of African economies, through limited restrictions, leading to the stimulation of trade, commerce, and industry”.
“In signing the AfCFTA, and depositing the instrument with the African Union Commission, our countries made a statement on the determination of our collective economic fate.
He, therefore, said the fate is now in our hands to deepen growth and development on the continent through requisite legal frameworks, right policies, and robust implementation.
“The initial momentum from the signing of the agreement needs to be continued, for a greater continental impact, to benefit Africans, both on the continent and outside it,” he said.
Inflation, Forex Scarcity Push Food Prices Up in August
Food Prices Rise in August Amid Surge in Inflation
Persistent increase in prices amid forex scarcity bolstered food prices in the month of August, according to the recent report from the National Bureau of Statistics (NBS).
In the report released on Tuesday, the bureau said the average price of 1kg of imported high-quality rice rose by 40.69 percent year-on-year in August.
On a monthly basis, this increased by 2.30 percent to N501.71 in August 2020, up from N490.44 in July 2020.
Nigeria’s consumer prices that measures prices of goods and services rose to 13.22 percent in August as forex scarcity amid economic uncertainties weighed on Africa’s largest economy.
The statistic office said the average price of 1kg of yam rose by 34.74 percent year-on-year and decreased on a monthly basis by -0.15 percent from N256.44 in July to N256.06 in August 2020.
Similarly, the price of 1kg of tomato expanded by 29.48 percent year-on-year while it decreased on a monthly basis by 4.65 percent from N301.01 posted in July 2020 to N289.86 in August 2020.
NBS stated that selected food price watch “reflected that the average price of one dozen of agric eggs medium size increased year-on-year by 3.70 per cent and month-on month by 1.02 per cent to N478.97 in August 2020 from N474.12 in July 2020 while the average price of piece of agric eggs medium size (price of one) increased year-on-year by 5.44 per cent and month-on month by 0.76 per cent to N42.78 in August 2020 from N42.45 in July 2020.”
The report also noted that the recent flood caused by the sudden release of water from Kainji Hydro Power Dam in Niger State wreaked havoc on the N60 billion sugar investment project in the state.
According to Latif Busari, the Executive Secretary, National Sugar Development Council (NSDC), who spoke in Abuja, said the destruction was a huge setback for the flour mills industry and the entire nation as it would affect the 4,500 metric tons of sugarcane daily processing projected by the company and the one million tones of sugar production agreed with major sugar producers recently.
Busari, however, said the flood, which affected N60 billion investment, was not natural, but man-made from Kainji Dam.
FG Reduces Expenditure on JV Oil Assets by 62%
NNPC Lowers Spending on JV Oil Assets as Demand Drops
In a bid to reduce expenditure following a plunge in revenue generation, the federal government has cut down on spending on oil and gas assets currently being developed through a joint venture with private companies.
Federal Government lowered its expenses by 61.83 percent in the month of July, according to the latest report from the Nigerian National Petroleum Corporation.
The report showed NNPC, which has an obligation to make cash call payment for the development of the assets, only made $94.84 million or N34.14 billion cash call in July, down from $248.48 million or N89.45 billion in June.
The joint venture is managed by both the NNPC and private firms in proportion to their equity holdings and receives produced crude oil the same ratio.
This was largely due to the plunge in NNPC’s export receipt from $378.42 million in June to $122.44 million during the month under review.
“Of the export receipts, $67.45m was remitted to the Federation Account while $54.98m was remitted to fund the JV cost recovery for the month of July 2020 to guarantee current and future production,” it added.
In addition to the dollar allocation of $54.98 million to the JV cash call account, the naira portion of N14.35bn ($39.86m) was transferred to the account from domestic crude oil receipts in July, according to the NNPC.
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