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Tag: budget deficit

  • MTEF: Senate approves N1.64tr new borrowing to fund budget deficit

    The Senate on Wednesday adopted N1.64 trillion proposed by the Executive as the amount for new borrowing to fund the 2019 budget deficit.

    The upper chamber also approved the proposed N500 billion special social intervention fund.

    The adoptions were parts of the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) passed yesterday by the upper chamber.

    President Muhammadu Buhari sent the MTEF/FSP to the National Assembly on November 6, 2018 for consideration and approval.

    The passage of the MTEF/FSP came as the Senate is set to receive the report of the 2019 budget from its Appropriation Committee.

    The Senate adopted all the critical projections in the MTEF/FSP as proposed by the Executive.

    The MTEF/FSP an annual rolling three year-expenditure plan sets out the medium-term expenditure priorities and provides the basis for the preparation of the annual national budget.

    Senate Committee on Finance which considered the MTEF and FSP presented its recommendations for adoption by the Senate in plenary.

    Apart from the adoption of N1.64 trillion as the amount for new borrowing to fund the budget deficit, the Senate advised relevant agencies to continue to explore ways of generating additional revenues for government to bring down the fiscal deficit.

    Read Also: Senate confirms Paul Tarfa, 10 others as chair, Board Members of NEDC

    It said that the Federal Government should harness the full optimal potential of the ministry of Mines and Steel Development in terms of revenue generation to minimize the level of new borrowing.

    It also said that the Federal Government should consider reducing the granting of waivers and exemptions while ensuring that the Nigerian Customs Service personnel were at all oil terminals for accountability.

    The Federal Inland Revenue Service, it said, should consider increasing tax on luxury goods and services.

    On the N5000 special social intervention fund, the Senate asked for the cooperation of relevant committees in the National Assembly and other relevant MDAs in ensuring that the funds are judiciously utilized to provide tangible impact of the funds on the Nigerians.

    The Senate retained the oil output of 2.3 million barrel per day, oil price benchmark of $60 per barrel, exchange rate of N305/$1, GDP Growth rate of 3.0percent and Inflation growth rate of 9.98percent.

    Other Executive proposals for 2019 also adopted by the Senate included: proposed expenditure of N8.83 trillion, FGN retained revenue N7.92 trillion, fiscal deficit N1.86 trillion, new borrowings N1.65 trillion, statutory transfers N492.4 billion, debt service N2.14 trillion, Sinking Fund N120 billion, total recurrent (non-debt) N4.72trillion, personnel costs (MDAs) N2.29 trillion, capital expenditure N2.86 trillion, Special Intervention N500 billion.

    The committee said that crude oil production output stood at 2.0 million barrels as of December 2018.

    According to the committee, the 2.3million daily target is achievable “due to the continuous efforts of all stakeholders in checkmating the issues of oil facilities vandalism and other vices associated with such regard.”

    The committee which recommended exchange rate of N305/$1, asked the Central Bank of Nigeria (CBN) “to continue adopting strategies that will aid the strengthening of the naira and bridging the gap between the official and parallel market rate of the foreign exchange.”

     

  • Bridging budget deficit through telecoms sector

    Bridging budget deficit through telecoms sector

    The Federal Government is thinking of ways to bridge the N2.36 trillion deficit in this year’s budget proposal. It hopes to finance the deficit mainly by borrowing about N2.32 trillion. About N1.067 trillion or 46 per cent of this borrowing will come from external sources; N1.254 trillion will be borrowed from the domestic market. The Nigerian Communications Commission (NCC) and the Federal Inland Revenue Service (FIRS) are cross pollinating ideas on how to improve revenue generation to reduce the government’s debt burden, LUCAS AJANAKU reports.

    The International Monetary Fund (IMF) has warned that Nigeria’s budget gap will probably be larger than Federal Government’s estimates this year because revenue from taxes and state companies will be lower than forecast.

    In Article IV report that followed meetings with Federal Government officials, it said the budget deficit may reach 3.7 per cent of gross domestic product (GDP) this year, higher than President Muhmmadu Buhari’s projected gap of 2.8 per cent.  The gap was 2.8 per cent last year, preliminary estimates show. It was 4.7 per cent on a consolidated basis.

    “The larger deficit would likely have to be financed domestically, further raising yields and crowding out private-sector credit,” the IMF said.

    Buhari’s N7.3 trillion ($23.1 billion) budget for this year to boost infrastructure investment and help the ailing economy recover from a contraction of 1.5 per cent last year, the first such slump since 1991. The economy was weighed down by a drop in the price and output of oil, its biggest export, which led to dollars crunch.

     

    Revenue target

     

    According to the Ministry of Budget and National Planning, the government has a revenue target of N2 trillion from oil and N1.37 trillion from non-crude sources including tax collections.

    While the government is undertaking tax reforms under the new seasoned tax master, Chairman of the Federal Inland Revenue Service (FIRSC), Mr. Babatunde Fowler, to increase revenue collection, the impact of those measures will be gradual, the IMF’s Mission Chief in Nigeria, Gene Leon, said on a call with reporters.

    Although the naira has fallen 36 per cent against the dollar since the Central Bank of Nigeria (CBN) removed a peg in June, investors say Governor Godwin Emefiele is preventing it from dropping further through trading and import restrictions and regular sales of foreign exchange.

    The currency is as much as 20 per cent overvalued, Leon said. A depreciation of that size would take it to about 390 per dollar, almost matching the black-market rate of 398.

    The average yield on the government’s naira-denominated debt has risen 424 basis points over the past year to 16 per cent, the highest level among 31 major emerging markets tracked by Bloomberg after Egypt.

    Nigeria will probably raise debt from more Eurobond sales this year, the IMF said. These, together with concessional financing from the World Bank and the African Development Bank (AfDB), will make up 60 per cent of external debt. The government will also issue 10-year promissory notes equivalent to 2.2 per cent of GDP to settle domestic arrears, it said.

    This debt is in addition to a $500 million Eurobond sold last month as part of the 2016 budget and $1 billion raised in February.

    The Federal Executive Council (FEC) approved a 21-year $1.3 billion loan with the World Bank, AfDB and other institutions at two per cent, Finance Minister Mrs. Kemi Adeosun told reporters in the capital, Abuja. The money will be used for the new Development Bank of Nigeria that will lend small businesses long-term funding.

    The Federal Government said it expects budget-support loans of at least $1 billion from the World Bank, and a final, $400 million portion of a $1 billion credit facility from the AfDB.

     

    NCC, FIRS initiative

     

    Already, the National Bureau of Statistics (NBS) estimates that the telecoms sector contributes about 11 per cent to the GDP but desirous of improving the level of efficiency in tax management and revenue generation through deployment of technology, the NCC and FIRS has set up a Revenue Quality Assurance Committee (RQAC) for the telecommunications sector.

    This was the highpoint of the discussions between Executive Vice Chairman (EVC) of the NCC, Prof. Umar Danbatta and Fowler after a courtesy visit of the tax czar to the NCC Headquarters.

    Director, Public Affairs, NCC, Tony Ojobo, said the joint committee with four members each from the two organisations was to specifically examine and suggest ways through which the level of transparency could be attained via technology in tax management for FIRS and the returns from Annual Operating Levy (AOL) for the NCC.

    The Joint Committee, which is scheduled to meet this week, he added, should also see how workers matters, including payments are addressed. It is also to audit the states and explore the benefits accruable to them in terms of taxes collected.

    The Joint Committee is expected to work out a recommendation to facilitate the Type Approval of telecoms equipment that can be used for a transparent assessment of the operators’ revenues.

    Danbatta expressed concerns over the shutting down of Base Transceiver Stations (BTS) in the states indiscriminately without recourse to the Commission.

    “This is worrisome as it undermines the capacity to provide telecom services, thereby denying consumers good quality of services,” he told Fowler.

    The EVC cited the resolution of the National Economic Council (NEC) on Multiple Taxation, Levies and Charges on ICT Infrastructure in Nigeria dated March 21, 2013, saying the document is very clear on the issues of multiple taxations, levies, Right of Ways (RoWs) among others.

    Danbatta appealed to the FIRS chief “to help propagate the provisions of the policy to the Joint Tax Board (JTB)”, which he chairs.

    Fowler had earlier expressed worries over the taxes being collected from mobile network operators (MNOs) in the states.

    According to him, the concern stemmed from the fact that MNOs do not remit the Value Added Tax (VAT) already charged as at when due. “While some decide when they will remit it, the law stipulates that such taxes must be remitted to the FIRS between 20/21 of each month. Some too have not fulfilled the annual returns,” he lamented.

    In an earlier working document sent to the Commission, the FIRS had requested the permission of NCC to connect its equipment to the MNOs networks for a direct interface to which Prof. Danbatta had responded that such equipment must go through the Type Approval process.

    He said the NCC sees collaboration with the FIRS as a decision in the right direction.

    This, he added, underscores what  Buhari said about the collaboration of inter-governmental agencies, which saw to the timely completion of the Nnamdi Azikiwe International Airport, Abuja ahead of the time schedule.

  • Govt mulls 900,000b/d oil output to offset budget deficit

    Govt mulls 900,000b/d oil output to offset budget deficit

    • ‘Meeting 2.2mb/d projection difficult’

    Following the decline in oil production from the projected 2.2million barrels per day (mb/d) to an average of 1.5mb/d, the Federal Government has planned to make up for the shortfall in the 2016 budget with an excess production of 900,000 mb/d when normalcy returns to the restive Niger Delta.

    The Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu, made this known in a conversation with Richard Quest on CNN’s Quest Means Business, yesterday.

    Kachikwu said government has made adjustment  for the excess production since it appeared that it would be difficult to realise the 2.2mbd production budgeted for in this year’s budget.

    His words: “It is going to be difficult to catch up with the 2.2million barrels on which the 2016 budget was based. But we are certainly going to try, once things have calmed down and there is full production. We will need 900,000 bpd excess production to catch up and that is the projection that we are working on now.”

    He however admitted that production has declined in the last five months of continuous militancy in the Niger Delta. He however expressed optimism that the crisis could become history in the next few months, saying that government has been making frantic efforts at engaging, dialoguing with the stakeholders to resolve the crisis in the region.

    He said : “Yes it is a difficult time but like you rightly said, production is average of 1.5million barrels per day. And we intend to get along: first reason it is because of the militancy problem we have in the Niger Delta.

    “We are putting a lot of energy around it. There is a lot of dialogue, a lot of engagements, a lot of security meetings to try and resolve this. President Muhammadu Buhari is very concerned about this .

    “Executive time is being given to this. We are expecting and hoping that over the next one month, two months, we will find some final solutions that will bring solution up. Once we have done that , it is obvious that we have lost quite some months, five six months of continuos problems.”

    Kachikwu said he doubted if the Organization of Petroleum Exporting Countries (OPEC)  would cut production in its September meeting, stating that the possibility is remote owing to the organisations’ failure to unite on the issue.

    The minister pointed out that OPEC only produces 30 per cent of world oil, saying that unless there is a dialogue with the producers of the 70 per cent, the organization’s 30 per cent would not make a significant difference.

    Kachikwu said : “I am not too optimistic about that. We have tried that a couple of time and we have not been able to get the kind of unity we need to affect those cuts, neither are some of us convinced that once the cut is effected, it will have such a major impact.

    “As you know, OPEC produces about 30 per cent of world oil today. So unless we reach some commonality and dialogue with the 70 per cent producers, you will find out that the 30 per cent of the fraction won’t make the difference. So I am not too optimistic about that but the only thing I think we should continue to do, is to be aggressive about the dialogue with the 70 per cent producers, and that is finally what is going to get us there,” he stated.

  • Funding N1.84tr budget deficit

    Funding N1.84tr budget deficit

    The Federal Government has proposed an ambitious budget of N6.08 trillion for the 2016 fiscal year. The budget has N1.84 trillion deficit financing targeted mainly at infrastructure development to be funded through borrowing. The Debt Management Office (DMO) which is constitutionally empowered to explore local and international funding sources to see effective funding of the budget, needs government backing to achieve this feat, writes COLLINS NWEZE.

    That President Mohammadu Buhari presented a proposed N6.08 trillion 2016 budget to the joint session of the National Assembly, is no longer news. What far thinking stakeholders are looking at is how the government will finance the budget to achieve its developmental objectives and put the economy right on path of sustainable growth.

    The budget focuses on funding infrastructure, which entails the provision of tangible assets like housing, power (electricity), transport, education, communication, and technology, on which other intangibles can be built. It also seeks to protect the poor with a social safety net including scholarships and food provision in schools.

    The budget has revenue projection of N3.86 trillion, with oil related revenues expected to contribute about N820 billion or 21 per cent, while tax collection and public expenditure reforms in Ministries Departments and Agencies (MDAs) will account for the rest.

    The budget is clearly consistent and is part of the three-year Medium Term Expenditure Framework (MTEF). The budget seeks to stir Nigeria off the path of oil dependence by focusing on non-oil revenues by broadening the tax base and improving the effectiveness of the country’s revenue collecting agencies. However, the renewed drive to boost non-oil revenues may not be sufficient to cover the gap from lower oil revenues.

    And that is where the Debt Management Office (DMO) led by its Director-General, Dr. Abraham Nwankwo steps in. The budget has a deficit financing that requires an additional N1.84 trillion for capital expenditure, which must be funded through borrowing from local and international markets by the DMO.

    The capital expenditure represents over 30 per cent of total expenditure while Nigeria’s debt profile is expected to hit 14 per cent of Gross Domestic Product (GDP). Dr. Nwankwo said Nigeria’s low debt to GDP ratio means the country can borrow more to fund budget, infrastructure and other essential projects that will stimulate the economy and create jobs for the citizenry.

    The DMO is expected to source the additional N1.84 trillion for capital expenditure, N984 billion of which will come from local investors  and N900 billion from international investors.

    In a report titled: ‘Budget 2016: Changed budget, Changed People, Changed Leaders’, Managing Director, Financial Derivatives Company Limited, Bismark Rewane said the spending and revenue estimate is based on the Keynesian model of countercyclical spending to stimulate growth.

    Rewane said significant spending on infrastructure and security will complement reforms in agriculture and solid minerals.

    He said budget deficit of N2.2 trillion is projected which constitutes 2.16 per cent of Gross Domestic Product (GDP), and is considerably higher than the deficit of 0.79 per cent of GDP in the 2015 budget.

    Michael Albert, an economist based in Abuja, said if Nigeria is to borrow to fund the budget, the DMO is going to be responsible to perfect the borrowing process to ensure efficiency and positive feedback from investors. He said the debt office should be strengthened to enlighten the public on the benefits of such borrowing to the economy.

    “We have chances of borrowing more to fund capital projects. It better to borrow to fund projects and allow the people enjoy benefits of democracy that come with effective execution of identified and financed capital projects. Although saving to fund such projects is another option, but is not feasible at this period of low crude oil prices,” he said.

    For Albert, government is expected to enlighten the public and educate stakeholders on what the country stands to gain by borrowing to fund capital projects.

    “I expect the government to ask the DMO to source for the funds because the debt body has the expertise and experience to carry out the task. Besides, both domestic and external debts for Nigeria currently stand at N12.11 trillion which gives us the needed room to borrow more,” he said.

     

    Infrastructure needs

    The Africa Infrastructure Country Diagnostic (AICD) Report for 2011 estimates that Nigeria requires sustained spending of $14.2 billion per annum over the next decade in order to address the infrastructure challenge.

    The above scenario, clearly shows that as a result of the huge funding requirement for present and future infrastructural development and its attendant impact on survival and growth of businesses in Nigeria, traditional funding methods can no longer suffice as the traditional fund providers, different levels of government, do not have such resources at their disposal. Therefore debts may simply be the solution to bridging the infrastructure funding gap.

     

    Benefits of borrowing

    The DMO captures the benefits of using debts to fund projects more succinctly. “If you want to build a railway from Lagos to Aba, there are two options. Firstly, you can save up the money for 10 years, before starting the project. The second option is to borrow and build the railway, and within 10 years, generate enough revenues to offset the debt,” DMO’s head, Policy Strategy and Risk Management, Joe Ugolala said.

    He sees the second option as more plausible as it captures the inherent benefits of borrowing to build infrastructure that is in the interest of the economy. He explained that for one to borrow, there must be that inherent capacity to repay, whether the debt came from internal or external sources.

    He explained that the Federal Government has the capacity to borrow from outside to fund budget, and support specific projects including infrastructure.

    He said that despite challenges with external and internal economic volatility, the DMO is committed to supporting opportunities for employment generation. “We are more than ever committed to doing what we know how to do best, democritisation of public debt. We need to use debt to tackle poverty. We are committed to employment generation. Now that things are tight, we need to show that we are resilient people. We need to reassure ourselves that we have what it takes to achieve a sustainable growth,” he said.

    He called for the democratisation of public debt management system, adding that Nigeria’s debt to Gross Domestic Product (GDP) ratio is still low.  “The rebasing of the economy shows it has grown rapidly, and that the larger the economy, the larger the debt. There must be optimum relationship between the equity and debt,” he said.

    Ugolala, said there is so much demand for infrastructure because of its immense benefits to the economy. Speaking on external and domestic borrowing guidelines for the Federal and State Governments and their agencies, he explained that the National Assembly has a role to play in government’s borrowing plan.

    Firstly, the National Assembly is to approve the borrowing programme for every succeeding year and approval of overall limits, for the amounts of consolidated debts of the Federal, state and local governments, to be set by the President on the advice of the minister.

     

    Other borrowing

    guidelines

    The National Assembly is expected to grant prior authorisation in the appropriation or other Act or Law for the purpose for which the borrowing is to be utilised. “The Federal Government may borrow from the capital market, subject to National Assembly’s approval. Government at all tiers shall only borrow for capital expenditure and human development on concessional terms,” the debt guidelines said.

    Any government of its agencies can only obtain external loans through the Federal Government and such loans must be supported by Federal Government guarantee. “No state, local government or federal agency shall, on its own, borrow externally. State governments and their agencies wishing to obtain external loans shall obtain Federal Government’s approval-in-principle, from the Federal Ministry of Finance,” it said.

    However, the borrowing proposal must be submitted to the Federal Ministry of Finance and the DMO for consideration, and must state the purpose for which the borrowing is intended and its link to the development agenda of government.

    It must also state the cost-benefit analysis showing the economic and social benefits to which the intended borrowing is to be applied; cash-flow statements of the Ministries, Departments and Agencies (MDAs), to ascertain their viability and sustainability. There must also be copies of the state’s Executive Council’s approval and the resolution of the State House of Assembly.

    Also, all banks and financial institutions requiring lending money to the Federal, State and Local Governments or their agencies, shall obtain the prior approval of the Minister of Finance and shall state the purpose of the borrowing and tenor.

     

    Economy diversification

    Dr. Nwankwo said diversifying the country’s source of revenue will make its public debt profile more sustainable. “So, it is an appreciation from the point of view of those global financial institutions that the Nigerian economy is moving to the next level and has been reclassified by the International Monetary Fund (IMF) to borrow,” he said.

    He allayed fears that Nigeria’s delisting from the Global Bond Index by JP Morgan will harm the economy. He said there was no cause for alarm and that the economy is still attractive to investors despite the JP Morgan action. He said should Nigeria need money from both local and international investors, it will get it.

    Dr. Nwankwo said there is nothing wrong in borrowing, and that as a nation, Nigeria can borrow to fund budgets or carry out key developmental projects. He called for the democratization of public debt management system adding that Nigeria’s debt to Gross Domestic Product ratio is still low.

    On the economy, Dr. Nwankwo said government has no choice than to diversify the economy away from oil. “There is still a broad resources base for diversifying and industrialising the economy. With appropriately structured financing, Nigeria should be able to programme a trajectory of long-term fiscal stability and self-sustaining growth,” he said.

     

    Drop in oil prices

    Dr. Nwankwo said with the drop in oil prices, government has no choice than to diversify the economy away from oil. “There is still a broad resources base for diversifying and industrialising the economy. With appropriately structured financing, Nigeria should be able to programme a trajectory of long-term fiscal stability and self-sustaining growth,” he said.

    He said the debt body has been helping the country  to    manage its debt effectively. For instance, it commenced the implementation of the strategic objective of assisting the states of the   federation to develop debt management institutions and capabilities since the last quarter of 2007, as part of its five-year strategic plan.

    The goal was to forestall a relapse into debt un-sustainability, as was experienced by the country before its successful exit from the Paris and London Club debts over-hang. The strategy was to redress the very weak debt management institutions, structures and practices at the state levels towards a more effective coordination of public debt management.

     

     

    The DMO has also established Domestic Debt Data of States of the 36 states, with framework in place for regular updates. The debt office has also helped in the passage by some states within the federation, the Fiscal Responsibility/Public Debt Management Laws to govern debt management and engender fiscal discipline.

     

     

     

  • Govt’s N365.35b budget deficit below projection, says CBN

    Govt’s N365.35b budget deficit below projection, says CBN

    The Central Bank of Nigeria (CBN) has denied reports that the Federal Government overspent the 2014 budget by N365.35 billion during the second half of the year.

    A statement endorsed by CBN’s Director, Corporate Communications, Mr. Ibrahim Mu’azu,  said the Financial Stability Report from which this misleading conclusion was drawn clearly states that the fiscal operations of the Federal Government resulted in an overall deficit of N365.35 billion or 0.8 per cent of gross domestic product (GDP), as against the proportionate budget deficit of N482.10 billion for the second half of last year. The deficit was financed mostly from privatisation proceeds.

    This he said meant that “the Federal Government had initially projected to run a budget deficit of N482.10 billion during the second half of 2014. However, the actual outcome turned out to be much less than projected at N365.35 billion.”

    The difference of over N116 billion he said “indicates some prudence, rather than profligacy, in fiscal management.”

    Mu’azu noted that deficit financing of budgets, is contained in the Fiscal Responsibility Act, and is a widely accepted fiscal practice.

    Earlier, the apex bank had said it had disbursed N60billion from the N220billion Micro, Small and Medium Enterprises Development Fund.

    Addressingreporters after the flag-off of the disbursement of the fund to the physically challenged in Abuja yesterday, Special Adviser to the CBN Governor on Development Finance, Mr Paul Eluhaiwe said the apex bank had been making the funds available to entrepreneurs that met the laid down criteria.

    Eluhaiwe admitted that the criteria demanded from potential beneficiaries were because the CBN was being careful to ensure that those who got the fund has the ability to repay.

    Eluhaiwe said:“There are conditions for Micro Finance Bank to meet before they can assess the fund, and entrepreneurs also have to meet the condition before the fund can be disbursed to them.

    “So it takes a lot of rigor to put on the table resources for entrepreneurs to use. We dont want to make mistake; we want to disburse the fund and make sure people pay back for others to assess the fund. The CBN will do whatever it takes to disburse funds because we are dealing with banking and we want to make the fund sustainable.”

    States that have benefited from this fund include Osun, Delta and Benue states which Eluhaiwe said “gave a lot of resources to people with special disabilities. The N220 billion fund is for MSMEs and as we move from state to state, we will continue to work with them.”

    The Emir of the disabled colony in Abuja, Alh Mohammed Suleiman promised that his people will not “put the CBN to shame, we will use the fund effectively to prove to the world that there is ability in disability. If the CBN had started this long time ago, the rate of poverty in the country would have been reduced drastically.”

  • Experts optimistic capital market can address budget deficit

    Experts optimistic capital market can address budget deficit

    AT a time the nation is experiencing serious credit crunch which has adversely affected the ability of the government to deliver on its avowed promises, opinions are that the capital market can help augment the capital required to drive necessary socio-economic development in the country.

    This was the submission made by a cross-section of experts in Lagos at a one-day dialogue on ‘The capital market and 2015 federal budget’, organised by the Chartered Institute of Stockbrokers in collaboration with Association of Stockbroking Houses of Nigeria and the Association of Issuing Houses of Nigeria.

    According to the experts, the nation’s capital market can serve as a veritable source of funding for capital projects at all tiers of government.

    The capital market, the experts noted, was best suited for infrastructure financing, given the paucity ofn funds in the economy.

    While giving his remarks at the event, the Acting Director-General Securities and Exchange Commission, Mr. Mounir Gwarzo, said, “I think beyond this year’s budget, the capital market must begin to assert itself as the most reliable medium for government to source for funds to finance critical infrastructure. Our infrastructure needs are too massive to be dependent on the meager yearly budgetary allocation.”

    Gwarzo, who was represented by Mr. Edward Okolo, called on the stakeholders to come up with viable products through which such funds could be raised.

    Speaking earlier, Mr. Emeka Madubuike, chairman, Association of Stockbroking Houses of Nigeria (ASHON), said the capital market remains a rallying point for the national economy. “It is important that we draw the attention of policy makers at the highest level of government to know the role the capital market can play as far as growing the economy.”

    The Chairman, NASD OTC Plc, Mr. Olutola Mobolurin, in a keynote presentation, stressed that the 2015 budget proposal did not address key issues, stressing that the baseline assumptions of the budget were faulty especially with regards to the oil price benchmark. He also raised concerns about the presence of an allocation for subsidy and SURE P.

    Mobolurin also lamented the continued dominance of the stock market by foreign portfolio investors, who flee from the market at the slightest rumour or uncertainty.

    The NASD chairman, who noted that foreign portfolio participation in the market had increased from 14.8 per cent in 2007 to 59 per cent as of November 2014, said, “We must generate savings within the country to supplement the foreign investment. We cannot depend on foreign investment if we want to salvage this country. We need to expand local institutional investment capacity and to achieve this; pension fund administrators must play a larger role to do this.

    “They must participate actively in the formation of the capital market. They should buy mature bonds and tested companies.   20 per cent of all pension funds must be invested in equities.”

    The President, CIS, Mr. Albert Okumagba, called on the federal government to promote the culture of savings in the country through appropriate incentives.

    He added, “Another approach to national savings is the review of the privatisation programme of the federal government and the divestment of its holdings in the privatised companies in order to mobilise funds and encourage the private sector operators to develop the economy while the government provides an enabling environment.”

  • ‘Govt records N459.1b budget deficit in Q3’

    The nation’s budget deficit more than doubled in the third quarter to N459.1 billion ($2.9 billion), the Central Bank of Nigeria (CBN) has said.

    The budget deficit of sub-Saharan Africa’s second-largest economy jumped from N211.8 billion in the previous three months and N161.1 billion in the third quarter of 2011, the Abuja-based bank said in a report on its website.

    “The deficit was financed mainly from domestic sources, particularly through the issuance of additional Federal Government of Nigeria bonds,” the bank said.

    The country increased its target for this year’s budget deficit to 2.97 per cent of economic output in February, from a 2.77 per cent target announced in December 2011, after it added N733 billion of spending on fuel subsidies, according to the Finance Ministry.

    The country wants to narrow the fiscal deficit to 2.2 per cent of GDP next year, according to the October 10 budget proposal by President Goodluck Jonathan.

    During the period, N26.2 billion were withdrawn from the excess crude account “to bridge the shortfall in revenue for the period,” leaving $9.3 billion in the account, in which Nigeria saves revenue from crude sales higher than the budgeted price, the bank said.

    The government aims to raise savings in the account to $10 billion to provide a buffer against global economic uncertainty. Net foreign-currency inflows through the bank in the quarter stood at $5.8 billion, with inflows at $14.4 billion and outflows at $9.2 billion, according to the report.