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Subsidy: FG borrowing to import fuel, says minister

The Federal Government has said it sometimes borrows funds to buy petrol as the country continues to incur rising fuel subsidy bills. The government also confirmed that there was a possibility of global economic recession this year, but stressed that Nigeria’s foreign exchange reserves were healthy enough to withstand the shocks. The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this on Tuesday on the sidelines of the World Economic Forum in Davos, while speaking during an interview with Arise TV. In the interview, monitored by our correspondent in Abuja, the minister also stated that the Federal Government at some point had to borrow funds to buy Premium Motor Spirit, popularly called petrol, despite the huge subsidy spending on the commodity. Ahmed again insisted on ending the fuel subsidy regime, while adding that would be done gradually from the second quarter of this year by the current government. She said the government would be able to increase the revenue performance on the 2022 figure, as well as reduce the debt service to revenue ratio. “We also have to exit fuel subsidy, because that is also a very significant contributory factor. You can look at it in two ways – it is revenue that would have come to the government but it doesn’t because it has been spent on fuel subsidy,” she said. The minister added, “But also, where there is nothing for the government to buy the refined petroleum products, we have to borrow to buy the petroleum products. So if you take that out, that’s about N3.25tn, that is a significant relief.” Explaining why the fuel subsidy was not removed in June 2022 despite the plan of the government to halt it at the time, Ahmed said it was a decision that was taken by the government due to the lingering impact of the COVID-19 pandemic and heightened inflation. “Removal of fuel subsidy at that time would have increased the burden on the citizens, and the President does not want to contemplate a situation where measures are taken that further burdens the citizenry,” she stated.

CBN URGES BANKS TO COLLECT REDESIGNED NOTES OR FACE SANCTION

The Central Bank Governor, Mr Godwin Emefiele, has called on commercial banks to approach the apex bank branches across the country to pick up the new naira notes. Emefiele made the call when the apex bank took its sensitisation tour on the adoption of the newly redesigned naira notes to Computer Village, Ikeja, on Wednesday in Lagos. He said that the new naira notes were in the apex bank’s vaults awaiting pick up by the commercial banks. “We have been calling upon the banks to approach the Central Bank of Nigeria across the country to come and pick up the new notes; we have even waived some of the conditionality for accessing currency notes in order to accommodate the banks. “The banks were being given slots before, but now the Central Bank of Nigeria is bending over backward to accommodate the demands of the banks in order to service them, so that they can service you and so that everybody will have access to the new naira notes,’’ Emefiele said.Emefiele who was represented by Mr Kofo Salam-Alada, Director, Legal Services Department, CBN, said that the apex bank was seriously working to ensure that the new notes permeated everywhere. He said that the apex bank was currently going round commercial banks to monitor banks and their Automated Teller Machines (ATMs) to ensure that they stopped paying customers the new naira notes over the counter but via the ATMs. Emefiele said: “part of what we are doing is that we have monitors going around the banks now, I have been to some ATMs this morning and I’ve lodged a report and I’ve spoken to the management of the various banks.” He also said that penalties await any bank which failed to come and pick up the new notes and failure to lodge money into their ATM machines. He assured the marketers that the experiences they were having would soon be sorted out.

NEW NAIRA WILL CURB CORRUPTION, INFLATION, CBN INSISTS

The Central Bank of Nigeria has expressed assurance that the new naira notes will circulate to every nook and cranny of the country before the January 31, 2023 deadline. Many stakeholders have urged the CBN to extend its deadline for the phasing out of the old N1,000, N500 and N200 notes from January 31 to June 30, 2023, but the apex bank has maintained its stand on the issue. Speaking during the sensitisation to the new notes to market men and women at the Oja Oba Market, Akure, the Ondo State capital, on Wednesday, the CBN Acting Branch Controller in Ondo State, Mr Giwa Ademola, said the motive of the sensitisation was to inform the public about the newly redesigned naira notes. Ademola added that the event was also organised to inform them on the need to deposit the old notes before the deadline. He said: “The benefits of the currency redesign to the Nigerian economy are enormous given that this policy will help to control inflation, as the exercise will bring the hoarded currency into the banking system, thereby making monetary policy more effective. “It will also help with better design and implementation of monetary policy as we will have much more accurate data on money supply and monetary aggregates. “Statistics show that N2.72 trillion out of the $3.26 trillion currency in circulation as of June 2022 was outside the vaults of commercial banks across the country, and supposedly held by members of the public. This statistic shows that 84.71 per cent of currency in circulation are outside the vaults of commercial banks, with only 15.29 per cent in the central bank and commercial banks’ vaults.

STOCK MARKET SHEDS N47BN AS TRADING CLOSES BEARISH

The Nigerian stock market on Wednesday closed bearish with a loss of N47bn, driven by profit-taking activities in Dangote Cement Plc and 20 others. The All-Share Index depreciated by 85.80 absolute points, representing a decrease of 0.16 per cent to close at 52,615.51 points. Similarly, the overall market capitalisation value lost N47bn to close at N28.658tn. The market loss was driven by price depreciation in large and medium capitalised stocks among which are Dangote Cement, Dangote Sugar Refinery, Lafarge Africa, Geregu Power, and Nigerian Exchange Group. Market breadth closed negative as 21 stocks lost relative to 17 gainers. Chellaram recorded the highest price gain of 9.77 per cent to close at N1.46, per share. Consolidated Hallmark Insurance followed with a gain of 9.52 per cent to close at 69 kobo, while Linkage Assurance gained 9.09 per cent to close at 48 kobo, per share. International Energy Insurance appreciated by 7.89 per cent to close at 41 kobo, while Mutual Benefits Assurance gained 6.67 per cent to close at 32 kobo, per share. On the other hand, FTN Cocoa Processors led the losers’ chart by 6.67 per cent to close at 28 kobo, per share. Associated Bus Company followed with a decline of 6.45 per cent to close at 29 kobo, while Livestock Feeds shed 5.00 per cent to close at N1.14 per share. Regency Alliance Insurance shed 3.57 per cent to close at 27 kobo, while Oando depreciated by 3.51 per cent to close at N3.85, per share. Meanwhile, the total volume of trades declined by 4.61 per cent to 217.946 million units, valued at N4.472bn, and exchanged in 3,377 deals. Transactions in the shares of Sterling Bank topped the activity chart with 94.270 million shares valued at N145.519m.

FG RECORDS N14.28TN REVENUE SHORTFALL

The Federal Government has recorded a revenue shortfall of N14.28tn under the regime of the President, Major-General Muhammadu Buhari, (retd), according to data from the Budget Office of the Federation. The data was obtained from the budget implementation reports for 2016, 2017, 2018, 2019, 2020, 2021, and 2022 (January to November). In the period under review, the Federal Government projected N43.05tn as revenue to fund its budget but made only N28.77tn (66.83 per cent of expected revenue). In 2016, the Federal Government’s projected revenue was N3.86tn, but it realised only N2.95tn. In 2017, revenue projection was N5.08tn while revenue realised was N2.66tn. In 2018, revenue projection was N7.17tn, while the government and realised N3.87tn. In 2019, revenue projection was N6.99tn and realised revenue was N4.12tn. In 2020, the Federal Government’s projected revenue was N5.84tn, but actual revenue amounted to N4.04tn. In 2021, revenue projection was N6.64tn, actual revenue was N4.64tn. In 2022, projected revenue was N7.48tn, actual revenue amounted N6.49tn. The revenue shortfalls echoes concerns by the Minister of Finance, Budget, and National Planning, Zainab Ahmed, over the government’s inability to generate adequate revenue. Nigeria relies on oil for the majority of its revenue and in recent times, this revenue source has been impacted by low production and subsidy payment. From January to July 2022, Nigeria’s oil production slumped by 28 million barrels.

NGX COMPANY SECRETARY SET TO RESUME

The Nigerian Exchange Limited has announced the appointment of Ms Obehi Ikhaghe as the acting company secretary of the exchange until the appointment of a substantive company secretary. This was disclosed in a statement signed by the Group Managing Director and Chief Executive Officer, Nigerian Exchange Limited, Oscar Onyema. He noted that the appointment followed the recent resignation of the Group Company Secretary, Mrs Mojisola Adeola, from the employ of Nigerian Exchange Group Plc.Ikhaghe is a lawyer with over 13 years of experience spanning company secretarial, corporate law and general legal practice.She is a graduate of the University of Lagos and holds a master’s degree in law from the same institution. She has worked with the company secretariat team of the NNGX over the last five years.