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FG considering fresh borrowing from IMF – Finance minister

Published

2 years ago

October 13, 2022

The Federal Government is considering tapping into the newly created fund by the International Monetary Fund (IMF) to cater for its urgent financial needs, Minister of Finance, Budget and National Planning, Zainab Ahmed, has said.

She gave the indication on the sidelines at the ongoing IMF- World Bank meetings on Wednesday in Washington.

Many people including National Assembly members have expressed concern that the country might be approaching a debt trap its total debt standing at N42.84 trillion ($103,31bn) as of June this year.

The minister also said the FG had been engaging financial institutions to look into the country’s portfolio debt to restructure and further stretch the debt service period to give more fiscal relief.

“It is a fact that Nigeria’s debt has increased over the last three to four years, and this increase in debt was occasioned by the different kinds of exogenous shocks that the country faced, which are not unique to Nigeria,” she said.

“The last drawing we had from the IMF is the second round of special drawing rights (SDRs) that was provided for all the member countries. The IMF recently offered a food security package that countries can draw, and it is equivalent to about 50 per cent of their SDRs.

“We have not taken a decision to draw on that. We have to examine the requirements, terms and conditions, to see if it will be safe for us to draw because we don’t want to be drawn into an IMF programme.

“If they work for us, we will now decide to take it because the funds can certainly be useful in terms of adding to our reserves and coping with the challenges the country is facing.”

She said there were signs that the recent flooding in the country would cause more stress to the food system, affecting harvest and prices.

“The floods that have been happening are going to cause more stress on our food system. We realise that the floods are currently destroying crops and therefore the harvest that is expected will be much less, and it will mean that more of our people will struggle to afford food,” she added.

Ahmed also said the Federal Government plans to use up to 65 per cent of government revenues next year to service debt.

She said the government would scale back on some tax incentives and expand the tax net to ramp up domestic revenue.

The minister said, “Unfortunately, the cost of debt service is rising because of the rising interest rate globally, resulting in higher debt service costs. Our projection from the debt sustainability analysis is that Nigeria is able to cope with its debt service.

“We have been engaging financial institutions to look at the opportunity to restructure our debt to further stretch the debt service period to give us more fiscal relief. Those are some of the things we want to achieve in this meeting.

“Also, what we are doing is to ramp up domestic revenue mobilisation. There are so many different aspects that we are looking at, including cutting down on tax expenditure taxes, furniture, waivers, incentives that are being provided to encourage businesses.”

IMF Director of Research Department, Pierre-Olivier Gourinchas, advised low-income countries to progress toward debt restructuring to avert sovereign debt crises.

Gourinchas said many low-income countries were close to or already in debt distress and should urgently consider improving their liquidity buffers, including by requesting access to precautionary instruments from the Fund.

He said, “Countries should also aim to minimise the impact of future financial turmoil through a combination of preemptive macroprudential and capital flow measures, where appropriate, in line with IMF’s Integrated Policy Framework.

“There are clouds on the horizon, but progress on climate policies, debt resolution, and other targeted global issues will demonstrate that strengthened cooperation can achieve progress for all and help to overcome geoeconomic fragmentation.”

Related Topics:debt burden Featured Zainab Ahmed

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Corps Marshal, NADDC DG lead discussions at 10th Nigeria Transport Lecture

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May 21, 2024

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The Corps Marshal of the Federal Road Safety Corps (FRSC) Mr. Dauda Ali Biu, and the Director General of the National Automotive Design and Development Council, Mr. Joseph Osanipin, will lead other major players to attend the 10th Nigeria Transport Lecture holding in Lagos on Thursday, May 23, 2024.

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Organized by Transport Day Media (www.transportday.com.ng), the theme of this year’s edition, which is ‘Transportation Safety in Nigeria: The Way Forward’, is meant to discuss issues about transport safety in Nigeria.

The discourse, which will involve industry participants from both the public and private sectors, will x-ray transport safety cutting across all modes of transportation in Nigeria.

Also expected at the lecture are the Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Shippers’ Council, Nigeria Safety Investigation Bureau (NSIB), among others.

The Editor-in-Chief of Transport Day Media, Mr. Frank Kintum, stated that the topic is relevant in contemporary times because many lives and property had been lost to lack of adherence to safety measures in all modes of transportation.

He said, “Irrespective of the level of infrastructural development in the transportation sector, if safety is not promoted, we are going to continue to record loss of lives and valuable property.

“Hence, the lecture is meant to address pertinent issues concerning the industry as it concerns our local Nigerian setting.

“Aside from the lecture, we are also going to use the opportunity to recognize some players, both public and private sectors, who have significantly contributed to the growth of the sector and contributed to the economy in general.”

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Naira gains marginally at N1,490/$ on parallel market

Published

14 hours ago

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Naira gains marginally at N1,490/$ on parallel market

The naira appreciated further to N1,490 per dollar at the parallel section of the foreign exchange (FX) market on Monday, reflecting a 1.34 percent increase from the N1,510/$ rate recorded on May 17.

Currency traders in Lagos, known as bureau de change (BDC) operators, quoted the buying rate of the dollar at N1,450 and the selling rate at N1,490, yielding a profit margin of N40.

In the official FX market, the naira also appreciated by 1.93 percent, trading at N1,468.99/$ on Monday, compared to N1,497.33/$ on May 17. During intra-day trading, the naira fluctuated, depreciating to as low as N1,550/$ and appreciating to as high as N1,400/$.