Finance
Senate suspends plenary till Nov 15th as 2023 Appropriation Bill scales 2nd reading
By John Danjuma
The 2023 Appropriation Bill which was presented to the National Assembly by President Muhammadu Buhari last Friday has scaled second ready at the senate.
The bill is seeking an authorisation to issue out of the consolidated revenue fund of the federation the total sum of 20,507,942,180,704 for the year ending on 31st December, 2023.
After the bill scaled second reading following a debate on its general principles, the Senate suspended its plenary until 15th November, 2022 to enable its Committees embark on budget defence with relevant Ministries, Departments and Agencies (MDAs).
Leading the debate on the bill, the Senate Leader, Abdullahi Gobir said based on the budget fiscal assumptions and parameters, the current expenditure which is constituting over 43% of the total budget outlay is still too high.
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According to Gobir, the current expenditure contained personnel costs, pensions, benefits and over heads that are expenses that are necessary for stabilising the government and the polity.
He said, “it is expected that the total operations of the Federal Government to result in a deficit of N10.78 trillion Naira. This represents 4.78% of estimated GDP, above the 3% threshold set by the Fiscal Responsibility Act 2007.
“Countries around the world have of necessity over-shoot their fiscal thresholds for their economies to survive and thrive.
“There is a need to exceed the threshold considering the administration collective desire to continue tackling the existential security challenges facing the country.
“It is important to point out that issues of revenue shortfall and meeting unexpected emergencies can only be tackled either by borrowing or cutting expenditure, shrinking the economy and government and social services, rationalisation, job cuts etc.
“While the first option will pile up debts which must be paid in the future, it allows you to survive the present and stabilize to enable you to device the means of paying the debt. If invested properly, debt could provide one with the platform and capacity to pay the debt itself and catapult into a brighter future.
“The second option which is more dangerous is to shrink the economy and risk political suicide and economic turbulence by sacking workers, obliterating opportunities, cutting social service and starving our communities to death and Oblivion.
“To finance the deficit therefore is to engage in new borowings totalling N8.80 trillion; N206.18 from privatisation proceeds and N1.77 trillion drawdowns on bilateral/ multilateral loans secured for specific development projects/ programmes”.
“Although there is a growing concern over this administration resort to borrowing to finance fiscal gaps, let me state here that the debt level of the Federal Government is still within sustainable limits.
“Very importantly, these loans are used to finance critical development projects and programmes aimed at improving our economic environment and ensuring effective delivery of public services to our people.
“Nevertheless, it is also important to note that a budget deficit of this size requiring more indebtedness is not healthy for the long term development of the country, but this must be tolerated now because of the challenges of the time.
“It is important, above all to note that this is a budget of fiscal sustainability and transition with the principal objective of maintaining a fiscal viability and ensuring a smooth to the transition to the incoming administrations.”
In his remarks, the Senate President Ahmad Lawan bemoaned the huge loss of revenue due to high scale oil theft and called for appropriate sanctions against the perpetrators.
Lawan charged the committees of the Senate to, in the course of the budget defence, ensure critical scrutiny of the submissions and trace any leakage or wastages contained in it.
He futher called on them to give more priority on the completion of on going projects rather than initiating new ones to avoid incidents of abandoned projects, particularly now that the present administration is on its last lap.
The Senate President referred the bill to the Senate Committee on Appropriation for further legislative process, to report back in four weeks.
Business
Nigeria pays US$4.9 billion on petrol subsidy in 2024- NNPCL
It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.
Yemie ADEOYE
INSPITE of the official position of the Nigerian government that the controversial petrol subsidy is gone for good as announced by the President on assumption of office, the state owned Nigerian National Petroleum Corporation Limited, NNPCL has disclosed that petrol subsidy is still fully operational in Nigeria, although, under a different identity.
Umar Ajiya, Chief Financial Officer at the NNPCL, disclosed that it cost the company a staggering N7.8 trillion (US$4.9) to cover this price gap in the first seven months of 2024.
Rather than simply referring to these claims as subsidies, he stated that the company is merely managing the price difference in petrol imports on behalf of the federation, stressing that this should not be misconstrued as a return to subsidy payments.
This revelation has reignited discussions on whether the NNPC is indirectly offering subsidies, a concept typically defined as selling a product below its cost price.
Documents reviewed by Biztellers.com.ng showed that the term “subsidy” was used extensively in official correspondence between the NNPCL and the presidency, particularly in reference to the “shortfall.”
Recall that President Bola Tinubu reportedly approved NNPC’s request to utilize the 2023 final dividends due to the federation to offset these costs.
However, during a media briefing on Monday about the company’s 2023 audited financial statements, Ajiya refuted claims that the NNPC is involved in any subsidy scheme.
Ajiya further disclosed that the Nigerian government owes the NNPC N7.8 trillion ($4.9 billion) in subsidy-related debts for the period from January to July 2024.
In furtherance of his clarification to the News Agency of Nigeria (NAN), Ajiya insisted that no subsidy payments have been made to any marketer in the last nine years, citing the NNPC’s role as the sole importer of petrol under supply contracts.
He said, “In the last eight to nine years, NNPC Ltd. has not paid anyone a dime as a subsidy; no kobo has been disbursed by NNPC Ltd. in the name of subsidy. No marketer has received any payment from us for subsidy.”
“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. So the difference between the landing price and that half price is a shortfall.
“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”
Ajiya remained silent on how much of the $4.9 billion could have been remitted to the federation account if the NNPC had not been covering the “shortfall.”
It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.
Banking
CBN Denies Currency Devaluation
The Central Bank of Nigeria (CBN) has refuted claims of devaluing the.
Earlier reports suggested that the CBN had devalued the Naira, lowering its exchange rate from N631 to the dollar, compared to the previous day’s rate of N461.60 at the Importers and Exporters (I&E) window.
However, the Central Bank of Nigeria (CBN) released a statement on Thursday through its Acting Head of Corporate Communications, Dr. Isa Abdulmumin, categorizing the report as false information.
In the statement titled ‘CBN Has Not Devalued The Naira’, he said the attention of the apex bank was drawn to the news report by an Abuja based newspaper edition of June 1, 2023, titled “CB Devalues Naira To 630/51”.
However, the CBN stated categorically that the news report was replete with outright FALSEHOODS and destabilizing innuendos, ‘reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.’
“For the avoidance of doubt, the exchange rate at the Investors’ & Exporters (I&E) window traded this morning (June 1, 2023) at N465/USS1 and has been stable around this rate for a while.
“The public is hereby advised to ignore the news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market,” the CBN spokesman added.
He, therefore, advised media practitioners to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.
Banking
BREAKING: CBN Increases Interest Rate By 0.5%
The interest rate in Nigeria has been raised to 18.5 percent, up by 0.5 percent, from 18 percent where it was pegged in March 2023.
The Central Banks of Nigeria’s (CBN) Monetary Policy Committee (MPC) resolved to this effect at its third meeting of 2023 in Abuja, on Wednesday.
Governor, CBN, Godwin Emefiele, made the disclosure in the communiqué of the MPC’s meeting, thereafter.
While engaging the media at the end of the two-day meeting, Emefiele, said the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.
In the view of the MPC, rising inflation rate is traceable to the high energy cost and challenges around the supply chain, among others, which lie outside the corridors of the CBN.
Emefiele said, “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”
Biztellers reports that the CBN had effected six consecutive interest rate increases, which has seen the rate move from 11.5 percent in March 2022 to 18.5 percent in May 2023.