Nigeria needs to fund 2021 budget through borrowing – Finance minister – Newstrends
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Nigeria needs to fund 2021 budget through borrowing – Finance minister

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  • SEC worries over rising debt servicing

Minister of Finance, Budget and National Planning, Zainab Ahmed, says Nigeria has to borrow to finance its budget given the urgent need to build infrastructure required for creating an enabling environment.

But the Securities and Exchange Commission has expressed worry over the increasing amount being spent on debt servicing by Nigeria, saying it constitutes a major economic threat.

The minister stated this on Thursday at the 5th Annual Budget Seminar of the Securities and Exchange Commission with the theme, “Financing Nigeria’s budget and infrastructure deficits through the capital market”.

She said this was further underscored by the current global pandemic with its attendant effects to Nigeria’s daily economic and social activities.

She said, “In order to provide the necessary infrastructure and still continue to meet other immediate expenditure needs, government often adopts deficit budgets which have to be financed through borrowing.

“In this regard, the capital market is very key. Of course, experience has shown that the Nigerian capital market has been very supportive in providing the necessary funds to finance government programmes and projects.”

The minister also said, “The (2021) budget has a total aggregate capital expenditure of N4.37tn amounting to 32.2 per cent of the total expenditure. The budget also has an overall deficit of N5.6tn to be financed almost equally from domestic and foreign sources.”

Nigeria, according to her, needs to spend more now on infrastructure and other capital projects, as the benefits of spending has resulted in Nigeria coming out of recession after two quarters of negative growth recently.

SEC, in a report presented at the forum by Afolabi Olowookere, its Head of Economic Research and Policy Management Division, Office of the Chief Economist, stated, “Total public debt has increased from N5.24tn in 2010 to over N32tn in 2020; still fine at around 20 per cent of GDP (Gross Domestic Product). But rising debt service is a threat. Also shocks to commodities price (are) affecting revenue. And low tax to GDP ratio.

“Moving towards improved sustainability may require future debt tied to revenue-generating projects.”

It observed that Nigeria’s budget had more than doubled in the last 10 years, while the country’s deficit had increased several folds.

“But capital expenditure and infrastructure estimates have not increased much. Implying deficit is often incurred to finance short-term consumption (unproductive) items,” it stated.

The SEC report also stated that the Federal Government’s Economic Recovery and Growth Plan projections were largely unmet.

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Tinubu orders creation of single-digit tax system

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Tinubu orders creation of single-digit tax system

President Bola Tinubu has directed a creation of a single-digit tax system with a maximum of nine taxes for a company or an individual.

Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, disclosed this in Abuja while speaking with the management team of Guinness Nigeria who paid him a visit.

A statement on Wednesday by Dare Adekanmbi, Special Adviser on Media to the FIRS chairman, quoted Adedeji as saying, “The President gave a directive that he wants a single-digit tax in the country, meaning that the maximum number of taxes we will have after the work of the Presidential Committee on Fiscal Policy and Tax Reforms will be nine taxes.”

The statement added that the plan was aimed at having a conducive environment “created for businesses to flourish and grow the economy.”

 

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Naira gains further against dollar

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Naira gains further against dollar

The Naira rose further in the official market on Tuesday, trading at N1,382.95 to the dollar.

According to data from the FMDQ’s official trading portal, the Naira rose by N25.09, or 1.78 percent, from the previous day’s rate of N1,408 versus the dollar.

On Tuesday, total turnover was $245.58 million, up from $222.15 million on Monday.

Meanwhile, at the Investor’s and Exporters (I&E) window, the Naira traded between N1,486 and N1,300 against the dollar.

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The News Agency of Nigeria (NAN) reports that the Central Bank of Nigeria (CBN) had, earlier on Tuesday at its 294th Monetary Policy Committee (MPC), raised Monetary Policy Rate (MPR) by 200 basis points from 22.75 per cent to 24.75 per cent.

CBN governor Yemi Cardoso said that was meant to tackle the nation’s rising inflation.

Naira gains further against dollar

(NAN)

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CBN jacks up interest rate amid soaring inflation

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CBN jacks up interest rate amid soaring inflation

The Central Bank of Nigeria (CBN) on Tuesday raised the interest rate from 22.75 per cent to 24.75 per cent amid soaring inflation.

Governor of the central bank, Olayemi Cardoso, made this known after the two-day Monetary Policy Committee (MPC) meeting held on Monday and Tuesday.

The country’s latest annual inflation rate jumped to 31.70 per cent from 29.90 per cent for last month, fueled by a continuous rise in food prices.

Cardoso disclosed that the MPC voted to adjust the asymmetric corridor around the MPR at +100 to -300 basis points.

He said the committee voted to retain the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and adjust the CRR of merchant banks from 10 per cent to 14 per cent.

The committee also voted to retain the liquidity at 30 per cent.

He said, “Members noted the continued rise in headline inflation driven largely by food prices, because of supply shortages, and high cost of Logistics and Distribution.

“The committee, therefore, was of the view that addressing food insecurity is key to containing current inflationary pressures.”

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