BUSINESS
FG Pays N2.03tn Interest on CBN Loans in 23 Months
By Joseph Amah, Abuja
The Federal Government paid interest of N2.03tn from January 2020 to November 2021 on the loans it got from the Central Bank of Nigeria through the Ways and Means Advances, according to official data. Ways and Means Advances is a loan facility used by the central bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law.
Data obtained from the government’s Medium-Term Expenditure Framework and Fiscal Strategy Paper 2022-2024 show N912.
57bn was spent on the payments of interest on Ways and Means Advances in 2020, although there was no budgetary allocation for it in the 2020 budget. The Federal Government spent N1.12tn on interest on Ways and Means Advances from January to November last year, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said during the public presentation of the approved 2022 budget, although there was no budgetary allocation for it in the 2021 budget.The CBN said on its website that the Federal Government’s borrowing from it through the Ways and Means Advances could have adverse effects on the bank’s monetary policy to the detriment of domestic prices and exchange rates. “The direct consequence of central banks’ financing of deficits are distortions or surges in monetary base leading to adverse effect on domestic prices and exchange rates i.e macroeconomic instability because of excess liquidity that has been injected into the economy,” it said.
The World Bank had in November last year warned the Nigeria government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this put fiscal pressures on the country’s expenditures. According to the bank, the CBN financing and the fuel subsidy tend to adversely affect investments in human and physical capital. It said that the government had always under-budgeted for debt service as the government failed to consider the cost of ways and means financing in its debt service allocation.
A global credit rating agency, Fitch Ratings, had in January 2021 raised concerns over the Federal Government’s repeated recourse to its ways and means facility with the central bank. The agency said that the use of central bank financing in Nigeria could raise risks to macro-stability in the context of weak institutional safeguards that preserve the credibility of policymaking and the ability of the central bank to control inflation. The N15.51tn owed by the Federal Government to the central bank as of June 2021 is not part of the country’s total public debt stock, which stood at N38tn as of September 2021.However, the DMO said recently that it was working out the process of restructuring the overdrafts of the CBN for government financing to a long-tenored debt.
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)
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)
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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