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Hardship: Nigeria experiencing deepening economic crisis – IMF

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The International Monetary Fund, IMF, has warned that Nigeria is experiencing a deepening economic crisis.

IMF expressed concern that the stagnant per-capita growth, widespread poverty, and severe food insecurity have further intensified the persistent cost-of-living crisis in Nigeria.

This was contained in its recently published report titled ‘Review of Nigeria’s Post Financing Assessment by the IMF Executive Board.’

In line with the report, the inadequate collection of revenue has impeded the delivery of services and the allocation of resources towards public investment.

According to the report, the observed inflation rate for October stood at 27 percent compared to the same period last year (with food inflation at 32 percent).

The growth was attributed to the removal of fuel subsidies, the depreciation of the exchange rate, and the negative impact on agricultural production in the country.

The report read in part, “Nigeria faces a difficult external environment and wide-ranging domestic challenges. External financing (market and official) is scarce, and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation.

“Per-capita growth in Nigeria has stalled, poverty and food insecurity are high, exacerbating the cost-of-living crisis. Low reserves and very limited fiscal space constrain the authorities’ option space. Against this backdrop, the authorities’ focus on restoring macroeconomic stability and creating conditions for sustained, high and inclusive growth is appropriate.”

In the midst of Nigeria’s ongoing economic challenges, the report highlighted that on January 12, 2024, the Executive Board of the International Monetary Fund completed an evaluation of post financing and approved the Staff Appraisal without delay.

Additionally, it emphasized that Nigeria possesses sufficient capability to repay its debts to the IMF.

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My Refinery Will Reduce Fuel Price In Nigeria – Dangote

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Aliko Dangote, the Chairman of Dangote Group, has revealed that his $20 billion 650,000 barrels per day Lagos-based refinery will crash the price of fuel as it reduced the price of diesel in Nigeria.

Dangote disclosed this at a recent Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas.

Asked to speak on whether or not his refinery would crash the pump price of petrol, which sells at an average of N700 per liter, Dangote gave no affirmative answer, explaining how the price of diesel fell from 1,700 to N1,200 when his diesel flooded the Nigerian market.

He noted that his refinery currently has 4.78 billion liters of storage capacity for refined petroleum products.

“The issue of gasoline is certainly a different issue. That one is being dealt with by the government. But let me give you an example. In diesel, which the industries, transporters and everybody consume; when we first started, it was N1,700, and the dollar conversion was about N1,200 then. Immediately when we started, within two weeks we brought down the price to N1,000. We took it from N1,700 to N1,200 and from N1,200 to N1,700, we have given more than a 60 percent drop in price.

“With the currency now back up to about N1,500 per dollar, the price is still below N1,200. That’s a big improvement, from N1,700 to N1,200. And the diesel is available, we are not living from hand to mouth anymore,” Dangote replied when asked about a possible petrol price cut.

“The country doesn’t have strategic reserves in terms of petrol, which is very dangerous. But in our plant now, when you came, we had only 4.78 billion liters of various tankage capacity. But right now, we’re adding another 600 million.

“So effectively, as we go forward, the refinery will be the strategic reserve of the country in terms of petroleum products,” he noted.

Dangote alleged that the reason why international oil companies refused to sell crude oil to his refinery was that they did not want him to succeed.

“And I think that is the process that we’re now really going through. But the truth is that, yes, the country, the sub-region, and also the continent, of sub-Saharan Africa, need this refinery. So, you expect them to fight through non-supply of crude, non-purchase of the product, but I think it’s all temporary. We’ll get there,” he added.

Recall that Dangote Refinery turned to the US for 24 million barrels of crude supply monthly.

Consequently, the refinery shifted the date to commence supply of fuel to July 10–15, 2024, from June.

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Econony

Wema, Polaris, Unity Banks: CBN reveals stance

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On the future of Wema, Unity and Polaris banks, the Central Bank of Nigeria has said there is no plan to revoke their licences.

The acting Director of the Corporate Communications Department, Mrs Hakama Sidi Ali, on Monday, made this clarification in a statement.

Recall that a circular made the round on Monday suggesting that the apex bank has dissolved the boards of the three banks barely after revoking the licence of Heritage Bank.

However, the apex bank spokesperson described the claim as false.

CBN reassured members of the banking public of the safety of their deposits and the banking system’s resilience.

“Without prejudice to the ongoing recapitalization process, I want to restate that the Nigerian banking industry remains resilient.

“Key financial soundness indicators remain within current regulatory thresholds.

“Customers are, therefore, encouraged to proceed with their transactions as usual, as the CBN is committed to ensuring the safety of the banking system,” she stated.

On June 3, CBN announced the withdrawal of license for Heritage Bank over poor financial performance.

To quell public panic, the Nigerian Deposit Insurance Corporation, NDIC assured Heritage Bank depositors that it had already begun the process of repaying their money.

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Naira appreciates to N1,485/$ in parallel market

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The Naira appreciated in the parallel market to N1,485 per dollar from N1,490 per dollar on Monday.

However, the Naira appreciated to N1,473.66 per dollar in the Nigerian Autonomous Foreign Exchange Market, NAFEM.

Data from FMDQ showed that the indicative exchange rate for NAFEM fell to N1,473.66 per dollar from N1,483.62 per dollar on Monday, indicating N9.96 appreciation for the naira.

The volume of dollars traded on the window increased by 138.6 percent to $385.91 million from $161.69 million on Monday.

Consequently, the margin between the parallel market and NAFEM rates widened to N11.34 per dollar from N6.38 per dollar on Monday.

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