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Nigeria’s Total Debt’s N87.37trn in Q3 2023, DMO Confirms

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The Director General of Debt Management Office (DMO), Ms. Patience Oniha, has confirmed Nigeria’s debt stock stands at N87.37 trillion as at September 30, 2023.

Oniha, who disclosed this during the interactive session held at the instance of House Committee on Appropriations chaired by Hon. Abubakar Bichi, however, noted that while justifying the rationale behind the borrowing spree, she informed the Parliament that projects implemented by Federal government during the three previous recessions were funded through borrowing.

She said: “Let me speak a bit about public debt as you requested in the letter inviting us.

 “The first point is that we have run budget deficit for many years for which the DMO has been raising funds locally and internationally to support the budget.

“The point I would like to make is that as the level of borrowings increases you have to service them so debt services increase also.

“Again, we run budget deficits because we have projects and programmes in the budget that the government wants to run. If we go back from 2015 and 2016, we know we have been through about two or three recessions. So, a lot of that bringing the economy out of recession was funded from borrowing.

“The first one was through the Economic Recovery and Growth Plan and the last one was during COVID. So, debt has increased and so has debt service increased.

“We usually publish the debt data every quarter. So, the most recent data we have in terms of debt stock is as at June 30th of 2023. The figure for public debt is N87.37 trillion. That is made of of external and domestic debt and it is for the Federal Government and the 36 States and FCT.

“Let me quickly add that out of the 87 trillion, about 90 percent belongs to the Federal Government. I believe because of the role the Federal Government plays, we account for the largest share.

“But we report everything because that is best practice. If you compare that figure to last year’s December, it was N46 trillion.

“So, it has grown sharply because we have borrowed…you can say in six months but also because we added the Ways and Means advances to that number. It is public. It was approved.

“The DMO’s role is to manage that debt and make sure it is sustainable and that there is no default because borrowing is not a bad thing but when you borrow you use it well.

“Debt has been growing largely from new borrowings. You see the MTEF for instance that you have approved, it has borrowings in each of the years of N8.7, N10.2 and N11.58 trillion just to buttress the point that as you increase the funds the debt stock grows.

“So, it also also growing because we have issued Promissory Notes and again like I said, Ways and Means advances. We usually like to say that debt stock relative to our GDP is not the issue.

“That has grown from 23 percent in March to about 40 percent in June. The same way the debt stock grew.

“But we need to do, to focus on debt service revenue which is very high. That is why I said the discussions about revenue, we cannot stop talking about them enough.

“So, apart from trying to generate as much revenue as we should, what else should we be doing? We are advocates for a number of initiatives being taken. Should be privatized if those projects can be better managed. You can attract capital. Do the private-public partnership so not everything is on the budget. Because when you put everything on the budget, you cannot get a deficit for which you need to borrow.

“We should strongly support the Fiscal Reform and Tax Policy Committee, we really need to get that working to change the story of us.

“For this year 2023 the DMO was to provide about N8.8 trillion, N7 trillion of that is domestic; meaning we borrow it here on naira. And then there is N1.7 trillion that ordinarily in normal times, we would have issued Euro bonds or from other sources.

“So, out of the domestic of N7 trillion as we speak, we have raised the full amount. So, you can say we have raised a significant amount to fund this budget.

“If the international markets had been covered and we were investing in counties with similar ratings like Nigeria by now we would also have issued a Euro bond.

“We have been extremely supportive of funding the budget and the operations of government,” Ms. Oniha noted.

While speaking on funding of some of the proposed infrastructural projects, she disclosed that the present administration is to ensure direct support with the SUKUK.

According to her, “This year some of that 7 trillion we issued it by way of SUKUK and you will soon begin to see the roads across the FCT.

“Having spoken to what is in the 2023 of which we have raised 7 trillion out of the 8.8 trillion. So we know that in 2024, from the MTEF there is N8.749 trillion.

“So, the levels of borrowing are still high but I think as the MTEF is a rolling document, as the picture looks better on revenues maybe the numbers would be lower.”

Speaking earlier, Chairman, House Committee on Appropriations, Hon. Abubakar Bichi explained that the interactive session with heads of MDAs was aimed at addressing strategies for the rising inflation, reducing the burden of Nigeria’s debt profile, sectoral budgetary allocations, and the dynamics of budget releases.

“Others are economic diversification strategies, revenue generation forecasts, and any useful information that will facilitate the enactment of the bill and effective implementation of the Appropriations Act, 2024.

“Amidst concerns to address the infrastructural gap in the country, eliminate poverty, and generally achieve the 8-Point Renewed Hope Agenda, there is a need to ensure that all loose ends to revenue are tied, as this can have a gross impact on the government’s ability to implement the 2024 Appropriation Bill when passed.

“While the revised MTEF and FSP showed that revenue-generating efforts by the present administration are already yielding fruit, more needs to be done to ensure that government-owned enterprises optimize their revenue-generating potential.

“In light of the above, this interaction is designed to engage relevant stakeholders to provide insight on the perspective of the budget and enable the Committee to play its coordinating role in ensuing allocative efficiency in the 2024 appropriation process,” Hon. Bichi noted.

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Economy

Senate Summons CBN Governor over Naira Free Fall

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The Senate, on Wednesday, summoned Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, over the free fall of the Naira and hyper inflation.

The summons was through its Committee on Banking, Insurance and other Financial Institutions headed by Senatorial Adetokunbo Abiru.

The governor and his team were asked to appear on Tuesday next week to explain the state of the economy and the free flow of the Naira at the forex market.

The committee, at a meeting on Wednesday, expressed concern over the endless depreciation of Naira that saw it rise to N1,520 to a US dollar as of Wednesday.

Speaking with journalists after the meeting held behind closed door at the National Assembly, Senator Abiru said the state of the economy, especially the inflation index, is of great concern to the lawmakers.

He said: “We have held a meeting this afternoon essentially to focus on the direction of the Nigerian economy.

“We are all living witnesses of what is going on.

“Underlining the major issue of the economy is the way the inflation index has been and of course it is a major concern to us.

“We have deliberated among ourselves. Critical issues were addressed and we believe that the next line of action is to summon the governor of the Central Bank on Tuesday at 3 O’clock to brief us properly on the state of the economy.

“That we have resolved, and will communicate to the governor of the Central Bank after which we will have further communication with members of the press.”

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Economy

Despite Controversy, 1,500 Redeployed CBN Staff Resume at Lagos Office

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At least 1,500 members of staff of the Central Bank of Nigeria will on Friday resume at its Lagos office following their redeployment from the headquarters, according to The Punch.

A source at the apex bank told our correspondent exclusively that the plan, though heavily criticised, was still in motion, and affected staffers would be resuming on Friday.

“Yes, the plan is still on and they will resume work by February 2, which is the first week of next month,” an official said.

The latest development comes on the backdrop of the decision of the new management to relocate some of CBN’s departments to the country’s economic hub for staff safety, increased productivity, and to decongest its head office.

CBN said the action was necessitated by several factors, including the need to align the bank’s structure with its functions and objectives and redistribute skills to ensure a more even geographical spread of talent.

It added that it was also in compliance with building regulations, as indicated by repeated warnings from the facility manager, and the findings and recommendations of the Committee on Decongestion of the CBN Head Office.

A memo issued to staff read, “This is to notify all staff members at the CBN Head Office that we have initiated a decongestion action plan designed to optimise the operational environment of the Bank.

“This initiative aims to ensure compliance with building safety standards and enhance the efficient utilisation of our office space.”

According to reports, the departments penciled down for relocation by the CBN governor Yemi Cardoso include Banking Supervision, Other Financial Institutions Supervision, Consumer Protection Department, Payment System Management Department, and Financial Policy Regulations Department.

Although the Northern Elders Forum and some other Northern groups had condemned the move, our correspondent gathered that the CBN governor was committed to implementing it, as it is expected to reduce the  HQ occupancy level to 2,733 personnel from 4,233.

Another source told the PUNCH that some of the affected staffers had started relocating to Lagos.

“Some have already gone ahead. Over 80 per cent of the Banking Supervision Department staff have been redeployed and the same for the Payment System Department,” the source hinted.

The NEF had, in a statement, expressed worry over the potential negative impact of relocating those essential departments on both the institution itself and the country as a whole.

“The movement would involve increased costs, loss of talent, disruption in operations, reduced coordination, regional economic disparities, impaired economic development in Northern Nigeria, and decreased investor confidence in the nation’s economy.

“Therefore, relocating them entirely to Lagos will only serve to further strengthen the already dominant position of Lagos, while potentially weakening the significance and role of Abuja,” it claimed.

More so, the Chief Whip of the Senate, Senator Ali Ndume, warned that there would be “political consequences” if the plan to relocate some departments of CBN as well as the corporate headquarters of Federal Airports Authority of Nigeria to Lagos were implemented.

He said, “Those misleading the President are not doing him any good because this is going to have some political consequences. If Tinubu were not elected president, the CBN governor would not be there. It was not Lagos votes that put Tinubu there.”

Northern senators and youths also expressed displeasure over the move, which they claimed was a calculated move to short-change the North.

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Economy

Banks Serve Notice of Electronic Transfer Levies Deduction from Customers’ Accounts

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Deposit money banks in the country have announced that they will comb their customers’ accounts to deduct the backlog of Electronic Money Transfer Levy (EMTL) on old foreign currency transactions.

The deductions, which will be effected in January 2023, will cover all the affected transactions between 2021 and 2023,.

In a message sent by the banks to their customers on Tuesday, the lenders noted that the action was in line with the directive from the Federal Inland Revenue Service (FIRS).

Last month, the FIRS directed deposit money banks to deduct and remit the EMTL on foreign currency (FCY) transactions going forward.

The tax body said the levy is in line with the Finance Act 2020 and Stamp Act 2004, which impose an EMTL on the transfer of money deposited in any financial institution on any type of account.

Before the latest directive, the N50 charge on transactions from above N10,000 was only applicable to local currency transactions.

In a notice to the customers sent on Tuesday, a Tier-1 lender, Access Bank, said:

“We write to inform you of the Federal Inland Revenue Service (FIRS) notice to all banks, in line with the Finance Act 2020 and Stamp Act 2004, to remit the Federal Government Electronic Money Transfer Levy from foreign currency (FCY) inflows.

“Previously, the Electronic Money Transfer Levy was solely applicable to accounts receiving electronic deposits of N10,000 and above or its equivalent. However, starting January 2, 2024, the deduction will be extended to FCY inflows equivalent of N10,000 and above, incurring a charge of N50 (FCY equivalent).

“In compliance with this notice, outstanding Electronic Money Transfer Levy on FCY inflows from January 2021 to December 2023 are also to be deducted by January 31, 2024. We appreciate your understanding and thank you for trusting Access Bank.”

In September 2023, Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu, while providing an update on remittances to the federation account, revealed that the sum of N83.02 billion accounted for revenues from the electronic money transfer levy out of which N3.32 billion was paid to FIRS as cost of collection between January and June 2023.

The policy directive is coming on the heels of excruciating hardship encountered by bank customers over intense cash shortage that has hampered smooth business transactions across the country.

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