Economy

IMF Warns Nigeria of Debt Crisis, Urges Diversification

Published

6 years ago

October 10, 2018

Eric

The International Monetary Fund (IMF) yesterday warned Nigeria and Sub-Saharan African economies to check rising levels of debts, diversify their revenue bases or face crisis.

Nigeria’s debt profile was N22.3 trillion as at June 30, 2018. About two-thirds of the government’s revenues go into servicing interest payments, with the principal still waiting for redemption at maturity.

The IMF advised the country to guard against the temptation to let higher oil prices delay reforms, warning that despite the recent recovery, oil prices are projected to remain below the 2013 peak.

It also reaffirmed the World Bank Group’s growth reversal at 1.9 per cent from 2.1 per cent for 2018 and 2.3 per cent in 2019, with 0.4 per cent up compared to April 2018 forecast.

Unveiling the World Economic Outlook titled, “Challenges to Steady Growth”, at the ongoing yearly meeting of the IMF/World Bank Group, in Bali, Indonesia, the Economic Counsellor of IMF Maurice Obstfeld admitted growth rebound in Nigeria and other sub-Saharan African nations, saying the trend would be buoyed by the impact of recovering oil production and prices.

Nigeria’s growth is projected to increase from 0.8 per cent in 2017 to 1.9 per cent in 2018 and 2.3 per cent in 2019, 0.4 percentage point higher than the April 2018 forecast.

On the rising obligations of the sub-region’s economies, Obstfeld pointed out that strengthening fiscal positions was necessary to reduce debt vulnerabilities.

“Boosting non-oil revenues and continuing fiscal consolidation plans remain key goals for oil exporters.

The focus should be on growth-friendly fiscal adjustment, with a shift in spending toward productive and social outlays accompanied by effective domestic revenue mobilisation, broadening of tax base and strengthening of revenue administration.

“Moreover, enhancing financial resilience through proactive banking supervision, ensuring adequate provisioning for losses by banks and improving resolution frameworks to keep expensive public bailouts at bay can help foster a financial system supportive of growth.”

The IMF report also warned that most countries must build fiscal buffers to make room for policy responses to the “next recession” and reduce the long-term costs of servicing high public debts.

The executive director, Jubilee USA, Eric LeCompte, said there was heightened anxiety about the downturn in economic growth.

According to him, the IMF report reminds the world that inequality remains a serious problem, with economies not safe from financial crisis.

IMF’s disclosure came as President Muhammadu Buhari seeks approval for a fresh $2,868,540,000 external loan.

The request was contained in two separate letters to both chambers of the National Assembly and was read by Senate President Bukola Saraki at plenary yesterday.

The president said the money would be used to partly fund the 2018 budget.

Giving a breakdown of the loan, Buhari explained that $2.786 billion would be borrowed from the international capital market for part-financing of the 2018 budget’s fiscal deficit and financing of key infrastructure projects.

The Federal Government would also need to raise another $82.54 million from the international capital market to refinance the balance of $500 million mature Eurobonds.

The president’s letter reads: “Pursuant to Sections 21 (1) and 27 (1) of the Debt Management Office (Establishment Etc) Act, 2003, I hereby request distinct and specific resolutions of the National Assembly to issue USD2.786 billion in Eurobonds and other securities in the international capital market for the implementation of New External Borrowing approved in the Federal Government of Nigeria’s 2018 Appropriation Act for the part-financing of the 2018 budget’s fiscal deficit, as well as to finance key infrastructure projects in the 2018 budget; and issue Eurobonds and other securities in the international capital market for the refinancing of USD82.54 million, being the balance of the five-year USD 500 million mature Eurobonds.”

The president also sought Senate’s approval for the N346 billion Niger Delta Development Commission’s (NDDC) budget for 2018.

A breakdown of the budget indicates that while N313.883 billion should be appropriated for capital expenditure, N31 billion was earmarked for recurrent expenditure.

The Guardian

Economy

My Policy on Fuel Subsidy Removal Yielding Results, Says Tinubu

Published

2 weeks ago

March 11, 2025

Eric

President Bola Tinubu has declared that his fuel subsidy removal policy is yielding the desired results, pointing out that prices are gradually declining.

The President also asserted that investors are increasingly showing interest in the Nigerian economy, a development he attributed to the removal of fuel subsidies, a policy introduced on 29th May 2023.

Tinubu made these remarks on Monday while inaugurating the National Youth Council at the Presidential Villa, Abuja.

Addressing the youths, Tinubu emphasised that while politicians will always be politicians, true leadership is about fostering development that benefits future generations.

He urged Nigerian youths to take advantage of the opportunities being created by the government, particularly in the ICT sector, to contribute to national development.

Tinubu said: “I have listened to you. Today is not for long speeches. I just want to reassure you that you are the hope of this country. Everything rests on your shoulders. Every decision I have taken is about you and the future.

“When we removed the fuel subsidy, we were securing a future for generations yet unborn. Where is the investment? Where is the infrastructure? When you hear many professionals say they want to ‘JAPA’, it is because prosperity is not widespread at home. If we create opportunities and empower our people, they will have no reason to leave.

“This is your country to develop, build, and prosper in. The government is fully committed to you. Take this seriously. You can criticise politicians all you want, but ultimately, politics is about development and securing a future for the next generation.

“At the beginning, it seemed uncertain, difficult, and even hopeless. It felt like drawing water from a dry well. But today, the economy is turning a corner. Prices are falling, confidence in our economy is improving, and investors are showing interest. Technology is advancing, and you have opportunities before you.”

The President reminded the youths that they have a crucial role in advancing the nation’s development.

“It is all in your hands. My role is to help navigate, push, and implement key programmes to clear the path for you. But it is up to you to seize the moment. Look me in the eye and tell me what you think—whether it is right or wrong—and offer suggestions. We will consider them as long as they contribute to the prosperity of this country.

“I assure you that we will do everything possible to make Nigeria a better place for you, but we cannot do it alone. You represent over 60 per cent of our population. You are the heartbeat of our nation, and I hope you take this opportunity very seriously,” he said.

Economy

Naira Gains over Dollar for Three Straight Days in Parallel FX Market

Published

1 month ago

February 15, 2025

Eric

The Naira recorded three consecutive days of appreciation against the dollar in the parallel foreign exchange market, ending the week on a high note on Friday.

According to Abubakar Alhasan, a Bureau de Change operator in Wuse Zone 4, Abuja, the Naira strengthened to N1,565 per dollar on Friday, up from N1,570 on Thursday.

On a day-to-day basis, the Naira gained N5 against the dollar compared to the N1,570 traded on Thursday.

In the last three days, the Naira has gained N15 against the dollar in the black market.

In contrast, in the official market, the Naira continued to depreciate as of Thursday, according to data from the Central Bank of Nigeria.

The apex bank’s exchange rate data showed that the Naira fell to N1,507.88 per dollar on Thursday from N1,504.30 on Wednesday.

Overall, exchange rate movements across FX markets showed that the Naira ended the week with mixed sentiments of losses and gains against other foreign currencies.

Economy

NASS Passes Tinubu’s N54.99tr 2025 Budget Proposal

Published

1 month ago

February 13, 2025

Eric

The National Assembly, on Thursday passed, the N54.99trillion 2025 Appropriation Bill.

The bill was passed separately by the Senate and the House of Representatives.

A breakdown of the budget showed N3.645trillion for statutory transfers, N14.317trillion for debt servicing, N13.64trillion for recurrent expenditure and N23.963trillion capital expenditure (development fund), with fiscal deficit put at N13.08trn.

The Deficit-to-Gross domestic product (GDP) Ratio was put at 1.52%.

Last Week, President Bola Tinubu increased the 2025 fiscal year budget from an initial N49.7trillion to N54.2trillion, seeking approval from the Senate and the House of Representatives.

Chairman of the House Committee on Appropriations, Abubakar Bichi, while presenting the bill for consideration, stated that the committee met with the Presidential Economic Planning team to further discuss revenue projections and expenditure for the 2025 Appropriation Bill.

According to him, the 2025 Appropriation Bill was presented late, compared to that of 2024.

He urged the executive to present subsequent budgets to the National Assembly not later than three months before the next financial year, to maintain the January to December budget cycle.