Economy

FG Should Be Careful On Ability To Pay Back Loans – Cardoso

Published

1 year ago

March 5, 2024

Naijablitz

The Central Bank of Nigeria has warned Nigeria and other West African nations regarding trends in borrowing practices.

Traditionally, nations often relied on loans from the Paris Club, a group of creditor countries.

However, the CBN said it has observed a significant shift towards borrowing from non-Paris Club members and private lenders, such as banks and investors who buy government bonds.

The West African Institute for Financial and Economic Management has warned that Nigeria is at a high risk of falling into debt distress and urged the federal government to look for ways of improving revenue generation.

Governor of the CBN, Yemi Cardoso, gave the warning in Abuja at the Joint World Bank/IMF/WAIFEM Regional Training on Medium Term Debt Management Strategy in Abuja on Monday.

Represented by Dr Mohammed Musa Tumala, Director of the Monetary Policy Department of the CBN, Cardoso noted that while this change in who countries owe money to might seem like a minor detail, he emphasised that it is a critical development with serious implications.

He argued that the way countries manage debt owed to the Paris Club may not be as effective for these new lenders. Cardoso expressed concern that this new debt landscape could pose a threat to financial stability and economic recovery for many countries.

Cardoso said, “Public debt dynamics are increasingly influenced by significant debt servicing obligations to non-Paris Club members and private lenders, including commercial banks and bond investors.

“This shift in the debt structure represents a critical evolution in the global financial framework, with profound ramifications for public debt management in our countries.”

He also stated that recent events like the COVID-19 pandemic, geopolitical conflicts, and natural disasters have put a strain on many countries’ finances, making them more likely to seek loans from diverse sources.

However, these non-traditional lenders might come with stricter repayment terms and potentially higher risks compared to Paris Club loans.

“Following the COVID-19 pandemic, along with other developments such as geopolitical conflicts and natural disasters, the financial strain on our sub-region has escalated, posing a threat to their macroeconomic and financial stability and prospects for faster recovery,” he said.

Nigeria, despite being classified as having generally moderate debt risk, the CBN urged the federal government to remain cautious, particularly regarding potential liquidity risks. These risks, if not addressed effectively, could stem from weak revenue mobilization, a persistent challenge hindering debt sustainability and economic stability.

What the CBN is saying is that while Nigeria’s overall debt risk is considered moderate, the country still needs to be careful about its ability to pay back its loans (liquidity risk). This risk could become a problem if the government doesn’t collect enough revenue (money) in the future.

Dr Baba Yusuf Musa, Director General of the West African Institute for Financial and Economic Management told journalists, “When you compare Nigeria with the rest of the world or peer countries, you realise that with the 37 per cent debt to GDP ratio, we still have room to borrow but the issue with the Nigerian debt is you don’t use GDP to pay debts rather you use the revenue to pay for any debt”

He added, “If you look at it from the revenue side Nigeria is at a high risk of debt distress in terms of our borrowing so what we need to do now is to step up our capacity to generate revenue, the more revenue we have, the less ratio of debt to revenue we have.”

WAIFEM, he said, is “very much in support of what the federal government is doing because there is a window for the government to raise more revenue, all that the people need to do is to support the federal government diversify the sources of revenue and of course generate more sources of revenue, once we have this we don’t have debt problem but rather revenue problem.

He added, “What the Medium Term Debt Strategy does is that it smoothens the debt service so that going forward when borrowing, you take into consideration the redemption profile that you have and the type of loans that you have in your existing portfolio and then it will enable you also to minimise the cost and risk the future loans will add to the debt portfolio.”

Economy

SEE Black Market Dollar To Naira Exchange Rate In Lagos, FCT, April 7th 2025

Published

1 day ago

April 7, 2025

ADMIN

The local currency (abokiFx) opened at ₦1,560.00 per $1 at the parallel market, otherwise known as the black market, today, Monday, 7 April 2025, in Lagos, Nigeria, after it closed at ₦1,550.00 per $1 on Sunday, 6 April 2025.

Black market dollar to naira exchange rate today, 7 April 2025, also known as Aboki forex, can be accessed below.

NOTE: The exchange rate changes hourly. It depends on the volume of dollars available and the Demand. What this means is that…you can buy or sell 1 dollar at a certain rate and the price can change (high or low) within hours.

The official naira black market exchange rate in Nigeria today, including the Black Market rates, Bureau De Change (BDC), and CBN rates. Please note that the exchange rate is subject to hourly fluctuations influenced by the supply and demand of dollars in the market. As of now, you can purchase 1 dollar at a certain rate now however, it’s important to remember that the rate can shift (either upwards or downwards) within hours.

Economy

Crude prices slump to $65 first time since 2021

Published

2 days ago

April 6, 2025

Admin

Oil prices plunged this week to $65 per barrel as the United States import tariffs and an unexpected OPEC+ supply hike erased $10 per barrel from global benchmarks.

The price appreciated last week when US President Donald Trump imposed tariffs on any country that buys crude from Venezuela.

However, oil prices turned around the corner as of Friday, with Brent falling to $65, the first time since 2021.

According to oilprice.com, the combined effect of Trump’s import tariffs, OPEC+’s inopportune decision to speed up the unwinding of production cuts, and China’s retaliatory actions wiped off $10 per barrel from global oil prices, “with ICE Brent falling below $65 per barrel for the first time since August 2021.”

The US West Texas Intermediate crude futures lost $4.96, or 7.4 per cent to end at $61.99.

“Seeing backwardation barely change compared to the beginning of the week, one could assume that US tariffs are the defining factor for the price change. Nevertheless, this week will not go down well in the history of oil markets,” oilprice.com reports.

China’s retaliatory tariffs on US goods have escalated a trade war that has led investors to price in a higher probability of recession.

China, the world’s top oil importer, announced it will impose additional tariffs of 34 per cent on all US goods from April 10.

According to Reuters, nations around the world have readied retaliation after Trump raised tariffs to their highest in more than a century.

Aside from the tariffs, another factor that further pressured oil prices was the Organisation of the Petroleum Exporting Countries and Allies’ decision to advance plans for output increases.

The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd.

Economy

CBN allocates $197.71m into FX market to support naira

Published

2 days ago

April 6, 2025

Admin

The Central Bank of Nigeria has injected $197.71m into the foreign exchange market on Friday, April 4, 2025, as part of its commitment to ensuring adequate liquidity and maintaining orderly market functioning.

This was disclosed in a statement on Saturday by the Director of the Financial Markets Department, Dr Omolara Omotunde-Duke, reiterating the bank’s stance on maintaining market integrity and operational transparency.

The statement read, “In line with its commitment to ensuring adequate liquidity and supporting orderly market functioning, the CBN facilitated market activity on Friday, April 4, 2025, with the provision of $197.71m through sales to authorised dealers. This measured step aligns with the bank’s broader objective of fostering a stable, transparent, and efficient foreign exchange market.”

The CBN said the intervention was in line with its broader objective of fostering a stable, transparent, and efficient foreign exchange market.

It added that it remained focused on sustaining liquidity levels to support smooth market operations amid ongoing global economic adjustments.

The apex bank said the decision to boost liquidity in the FX market came against the backdrop of significant shifts in the global macroeconomic landscape, which had affected many emerging markets and developing economies, including Nigeria.

It noted that the recent introduction of new import tariffs by the United States on goods from several economies had triggered adjustments across global markets.

It added that crude oil prices—a major revenue source for Nigeria—had dropped by over 12 per cent, settling at approximately $65.50 per barrel.

The CBN said the downturn posed challenges for oil-exporting countries, influencing exchange rate dynamics and market sentiment.

The CBN stressed that it would continue to monitor both global and domestic market conditions. It expressed confidence in the resilience of Nigeria’s foreign exchange framework, which it said was designed to adjust appropriately to changing economic fundamentals.

The bank also urged all authorised dealers to strictly adhere to the principles outlined in the Nigerian FX Market Code, promoting transparency and upholding the highest standards in their transactions with clients and market counterparties.

Meanwhile, Nigeria’s official exchange rate fell to N1,600/$1 at the end of trading on April 4, 2025, as the tariffs imposed during the Trump era continued to impact global markets.

Data from the CBN showed that the naira closed at N1,600/$1, marking a 1.9 per cent depreciation compared to the N1,569/$1 recorded the previous day.

The figure also marked the weakest level the naira had reached since December 4, 2024, when it closed at N1,608/$1. The exchange rate has now weakened by 3.9 per cent in the first four days of April, after closing March at N1,537/$1.

According to the CBN, the exchange rate closed at N1,600/$1 on Friday, marking a 1.9 per cent drop from the previous day.

The intra-day highs and lows were reported as N1,625 and N1,519 to the dollar, respectively. The intra-day high of N1,625 is also one of the highest levels recorded this year, indicating that traders priced the naira at significantly weaker levels.

Conversely, the intra-day low of N1,519/$1 suggests that some traders still priced the naira stronger, possibly betting on short-term interventions.

The NFEM rate, which represents the average exchange rate, closed at N1,567, the weakest the naira has traded this year and since December 4, 2024.