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DMO, Lauds Tinubu, Makes Case for Improved Revenue, Less Borrowing 

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The Debt Management Office (DMO) has commended President Bola Tinubu for his economic focus on improved expenditure as a way of reducing public debt levels.

The Director-General of the DMO, Patience Oniha, said this in an interview on Friday in Abuja.

Oniha cited the removal of petrol subsidy and the unification of rates in the Foreign Exchange (FX) market, as steps capable of boosting revenue and reducing new borrowing.

She called for increased investment in infrastructure as key to economic growth and development, adding that Public-Private Partnership (PPP) was a more viable option for infrastructure development.

DMO recently released the Market Access Country-Debt Sustainability Analysis (MAC-DSA) for 2022.

MAC-DSA is a template used to analyse debt levels to determine future debt sustainability.

The DMO stated that the analysis of the results of 2022 MAC-DSA showed that the Total Public Debt-to-GDP ratio, was projected to increase to 37.1 percent in 2023 relative to 23.4 percent as at September 2022.

It said that the proposed increment was due to the inclusion of the N8.80 trillion new borrowings for the year 2023, and the Ways and Means Advances at the Central Bank of Nigeria of over N23 trillion.

It also listed estimated Promissory Notes issuance of N2.87 trillion in the debt stock under the baseline scenario.

“The Country’s debt stock remains sustainable under these criteria.

“But the borrowing space has been reduced when compared to the Nigeria’s self-imposed debt limit of 40 per cent set in the Medium-Term Debt Management Strategy (MTDS), 2020-2023.

“On the other hand, Debt Service-to-Revenue ratio at 73.5 percent in 2023 exceeds the recommended threshold of 50 per cent due to low revenue, which means that there is need to significantly increase government revenue.

“Under the alternative scenario, the total public Debt-to-GDP ratio at 45.4 per cent in 2023 exceeds the Nigeria’s self-imposed debt limit of 40 percent ” it said.

It said that the Debt Service-to-Revenue also exceeded the recommended threshold of 50 percent.

As part of its recommendations based on the MAC-DSA, the DMO called for moderation in new borrowings.

“The Baseline analysis projects total public Debt-to-GDP ratio at 37.1 per cent for 2023, indicating a borrowing space of 2.9 per cent (equivalent of about N14.66 trillion) when compared to the self-imposed limit of 40 percent.

“But it is recommended that this should not be used as a basis for higher level of borrowing as was the case in the 2023 Budget.

“This is because the outcome of the Shock Scenario, which is more realistic in the circumstances, exceeded the self-imposed limit,” it said.

It added that the projected Federal Government of Nigeria (FGN) Debt Service-to-Revenue ratio at 73.5 percent for 2023 is high and a threat to debt sustainability.

According to the DMO, it means that the revenue profile cannot support higher levels of borrowing.

“Attaining a sustainable FGN Debt Service-to-Revenue ratio would require an

increase of FGN revenue from N10.49 trillion projected in 2023 budget to about N15.5  trillion,” it said.

With respect to expansion in fiscal deficit, the DMO said that there was need to strictly adhere to the provision of extant legislations on government borrowing.

It specifically called for adherence to the Fiscal Responsibility Act 2007 and Central Bank of Nigeria Act, 2007 as it relates to Ways and Means Advances, in order to moderate the growth rate of public debt.

It also emphasised the need to prioritise revenue generation.

“There is urgent need to pay more attention to revenue generation by implementing far reaching revenue mobilisation initiatives and reforms including the Strategic Revenue Growth Initiatives and all its pillars.

“This is with a view to raising the country’s tax revenue to GDP ratio from about seven per cent (one of the lowest in the world) to that of its peers.

“Government should encourage the private sector to fund infrastructural projects through the PPP schemes and take out capital projects in the budget that are being funded from borrowing to  reduce budget deficit and borrowing.

“Government can also reduce borrowing through privatization and sale of government assets,” the DMO said. (NAN)

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Economy

Investors Gain N183bn on NGX

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The Nigerian Exchange Ltd. (NGX) continued its bullish trend on Wednesday, gaining N183 billion.

Accordingly, the market capitalisation, which opened at N59.532 trillion, gained N184 billion or 0.31 per cent to close at N59.715 trillion.

The All-Share Index also added 0.31 per cent or 303 points, to settle at 98,509.

68, against 98,206.
97 recorded on Tuesday.

Consequently, the Year-To-Date (YTD) return increased to 31.

74 per cent.

Gains in Aradel Holdings, Zenith Bank, United Bank For Africa(UBA), Oando Plc, Nigerian Breweries among other advanced equities drove the market performance up.

Market breadth closed positive with 34 gainers and 17 losers.

On the gainers’ chart, Africa Prudential, Conoil and RT Briscoe led by 10 per cent each to close at N14.30, N352 and N2.42 per share, respectively.

Golden Guinea Breweries followed by 9.95 per cent to close at N7.18, while NEM Insurance rose by 9.74 per cent to close at N10.70 per share.

On the other hand, Julius Berger led the losers’ chart by 10 per cent to close at N155.25, Secure Electronic Technology Plc trailed by 9.52 per cent to close at 57k per share.

Multiverse lost 7.63 per cent to close at N5.45, Haldane McCall dropped 6.07 per cent to close at N4.95 and Honeywell Flour shed 5.62 per cent to close at N4.70 per share.

Analysis of the market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 49.44 per cent.

A total of 320.10 million shares valued at N6.48 billion were exchanged in 7,943 deals, compared with 939.41 million shares valued at N12.81billion traded in 9,098 deals posted in the previous session.

Meanwhile, ETranzact led the  activity chart in volume with 70.27 million shares, while Aradel led in value of deals worth N1.22 billion.(NAN)

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Economy

Yuan Weakens to 7.1870 Against Dollar

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The central parity rate of the Chinese currency renminbi, or the Yuan, weakened 22 pips to 7.1870 against the dollar on Monday.This is according to the China Foreign Exchange Trade System.In China’s spot foreign exchange market, the Yuan is allowed to rise or fall by two per cent from the central parity rate each trading day.

The central parity rate of the Yuan against the dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
(Xinhua/NAN)

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Economy

Bring Kaduna Refinery Back into Operation, Youth Group Urges NNPCL

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Arewa Youths Initiative for Energy Reforms (AYIFER), has urged  Nigeria National Petroleum Corporation Limited (NNPCL)  to do everything possible to bring Kaduna Refinery back into operation.

National Coordinator of the group, Mr Bashir Al’Amin, stated this in a statement issued on Friday in Abuja.

Al’Amin specifically called on the Chief Executive Officer of NNPCL, Mallam Mele Kyari, to do all within his powers to rejuvenate the refinery and bring it up to global standard.

He said that having delivered the Port Harcourt refinery, coupled with the establishment of Dangote Refinery in Lagos, attention should be shifted to Kaduna refinery for easy spread of petroleum products.

“We are calling on Malam Mele Kyari to expedite action on Kaduna refinery so we can be at par with other regions in the country.

“We equally beg the NNPCL to do professional work in rehabilitating the old refinery and deliver a standard and functional petrochemical refinery and not a blending plant.

“Kyari should resist any temptation that could make him do something that can jeopardise his good image,” he said.

Al’Amin said that since the extinction of groundnut pyramid and textiles in Kano State as well as PAN in Kaduna State and with the Kaduna refinery getting moribund, a lot of youths had lost their jobs.

According to him, all their hopes in the north are tied to the legacy refinery, expressing the hope that God would use Kyari to deliver it well and on time.

He said that the group was solidly behind NNPCL in prayer and would be ready to celebrate the company if its expectations were met. (NAN)

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