Economy

Ways & Means hike: CBN may loan over N746bn to FG

Published

2 months ago

August 4, 2024

Admin

The Central Bank of Nigeria may print or wire over N746bn as a loan to the Federal Government based on the Ways and Means provision of the CBN Act.

In the Act, funds that the apex bank should provide to the Federal Government through Ways and Means is five per cent of the Federal Government’s previous year’s revenue.

Last week, the National Assembly raised the maximum borrowing percentage in the Act from five per cent to ten per cent.

Data from the National Bureau of Statistics on Saturday indicated that as of the third quarter of 2023, the Federal Government’s actual aggregate revenue was N7.46tn.

Based on the hike in Ways and Means funding approved by the National Assembly, the Federal Government would get no less than N746bn from the apex bank through the funding scheme.

The Ways and Means Advances are loan facilities used by the CBN to finance the government during periods of temporary budget shortfalls and are subject to limits imposed by law.

According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government with regards to temporary deficiency of budget revenue at such rate of interest as the bank may determine.

The Act read in part, “The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government.”

The maximum borrowing percentage in the Act was hiked from five per cent to ten per cent by lawmakers last week, as they also rescinded and re-enacted the 2024 Appropriation Act through an amendment bill sponsored by leaders of both chambers.

In the Senate, the increase in the threshold was achieved through the consideration and passage of a bill sponsored by its Leader, Senator Opeyemi Bamidele (APC Ekiti Central).

In his lead debate, Senator Bamidele explained that the bill seeks to amend the CBN Act to increase the total CBN advances to the Federal Government.

He stated that the bill aims to help the government meet its immediate and future obligations due to the increasing need for funds to finance budget deficits and other expenses.

“The Central Bank of Nigeria’s advances to the Federal Government are essentially loans that the Central Bank of Nigeria provides to the government to help it meet its financial obligations. These advances are typically short-term and are expected to be repaid by the government,” he said.

Senator Bamidele explained that the request to increase the threshold from five per cent to fifteen per cent of the previous year’s revenue was made to provide immediate funds to address budget shortfalls, finance essential government expenditures, maintain financial market stability, inject money into the economy, and support critical sectors like agriculture, healthcare, and infrastructure development.

He said this would also lower government borrowing costs compared to traditional borrowing methods.

During the debate, many Senators supported the amendment but argued that the 15 per cent should be reduced to ten per cent.

However, the Federal Government had in the past taken excessive advantage of Ways and Means loans.

The administration of former President, Major General Muhammadu Buhari (retd.), had come under heavy criticism for abusing the Ways and Means.

From 2014 to 2023, the Federal Government collected N30tn through Ways and Means from the CBN without National Assembly appropriation.

Following this, the Senate set up an Ad-hoc committee led by Senator Isah Jibrin (APC, Kogi East), to carry out investigations.

Commenting on the development, financial analysts said the CBN would have to print more cash to meet the demands for increased funds through the Ways and Means advances, pointing out that this could further raise inflation.

An economist, Paul Alaje, expressed concern over the increase in Ways and Means advances to the Federal Government from five to ten per cent.

He said the move would lead to increased pressure on the CBN to print more money, potentially affecting the economy adversely.

Another economist at Lotus Beta Analytics, Shadrach Israel, also expressed concern over the recent increase, noting that it could lead to an increase in money supply and, subsequently, inflation.

He, however, acknowledged that the current upward trend in interest rates might mitigate the effects of the increase.

Recall that the Minister of Finance and Coordinating Minister of Economy, Wale Edun, said the N22.7tn printed by the CBN through Ways and Means overdraft for the Federal Government from 2015 to 2023, under former President Buhari, threw the country into the current inflation.

Economy

SEE Naira To Dollar Exchange Rate In Black Market Today – 19th September 2024

Published

14 hours ago

September 19, 2024

Naijablitznews

By Mario Deepromoter

The Dollar to Naira exchange rate in the black market, also known as the parallel market (Aboki fx)? Here’s the exchange rate for today, 18th September 2024, based on information from Bureau De Change (BDC) operators

How much is a dollar to naira today in the black market?

As of today, in Lagos Parallel Market (Black Market), the exchange rate for buying a dollar is N1655, while selling is at N1660 on Wednesday, 18th September 2024.

It’s important to note that the Central Bank of Nigeria (CBN) does not recognize the parallel market (black market) and advises individuals to approach their banks for official Forex transactions.

### Dollar to Naira Black Market Rate Today:
– **Buying Rate**: N1655
– **Selling Rate**: N1660

### Dollar to Naira CBN Rate Today:
– **Buying Rate**: N1651
– **Selling Rate**: N1652

*Note*: These rates may vary slightly based on location and the specific Bureau De Change operator.

### CBN’s Outlook on External Reserves and Economy:

The Central Bank of Nigeria (CBN) has raised concerns over factors that may hinder the growth of Nigeria’s external reserves in 2024/2025. The removal of fuel subsidies, rising import costs, and increased debt servicing are cited as potential threats to the reserves.

This was detailed in the CBN’s Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the fiscal years 2024/2025. Despite these challenges, the CBN projects overall economic growth for Nigeria, driven by policies supporting agriculture, oil sector reforms, and foreign exchange market adjustments.

“The outlook for Nigeria’s external sector in 2024/2025 is optimistic,” the CBN noted, with expectations of favorable trade terms due to higher oil prices and improved domestic production. However, the bank also highlighted risks such as lower oil revenues, increased import bills, and rising external debt obligations.

Economy

Fuel price hike: OPEC blames tax imposition for increase

Published

18 hours ago

September 19, 2024

Kayode Sanni-Arewa

The Secretary General of the Organisation of Petroleum Exporting Countries, Haitham Al Ghais, has blamed tax imposition by major oil-consuming countries, not oil prices as the primary driver of fuel costs.

He disclosed this in a recent statement.

His comments come as Nigeria experienced several petrol pump price hikes in the last one year.

The latest was on Monday when the Nigerian National Petroleum Company Limited announced an additional pump price hike in its retail outlets between N950 per liter and N1,019.22.

Speaking on the factors responsible for fuel price hikes, Al Ghais explained that the prices paid by consumers at the pump were determined by various factors, including the price of crude oil, refining, transportation, marketing costs, oil company margins, and taxes.

According to Al Ghais, revenues generated from oil sales are often reinvested by oil-producing countries into the oil sector.

He stated that OPEC member countries reinvested a substantial portion of their revenue into exploration, production, and transportation projects.

On the other hand, the OPEC boss noted that consuming countries’ governments received significant revenue from taxes imposed on petroleum products.

In 2023, the Organisation of Economic Co-operation and Development’s average share of total tax on the final retail price increased year-on-year and amounted to approximately 44 percent.

“Therefore, for many consumers, taxation can be a more significant factor than the original price for crude, in feeling any pinch in their pocket at the pump,” he stated

“It is a sovereign right for countries and governments to develop their taxation systems, but when there is talk of concerns about the effect of high pump prices on the disposable income of populations, it is important to remember how much of this is from taxes flowing to finance ministries around the world”, he said.

Economy

BREAKING: CBN Endorses New Board For Keystone Bank (SEE LIST)

Published

2 days ago

September 18, 2024

Naijablitznews

By Mario Deepromoter

The Central Bank of Nigeria (CBN) has reconstituted the board of directors of Keystone Bank.

The move was announced on Wednesday, as part of the apex bank’s strategy to ensure sustained growth for the financial institution.

According to a statement from the Keystone Bank, Lady Ada Chukwudozie has been appointed as the new board chairman, alongside five other non-executive directors. They are Abdul-Rahman Esene, Mrs. Fola Akande, Akintola Ayodeji Olusoji, Obijiaku Samuel, and Senator Farouk Bello.

In addition, the CBN also named two new executive directors, Ladi Oluwole and Abubakar Usman Bello.

Lady Ada Chukwudozie, a prominent figure in Nigeria’s corporate sector, brings nearly three decades of experience in business strategy, management, and administration.

Her expertise cuts across multiple industries, including De-Endy Industrial Company Limited, Dozzy Group, the Manufacturers Association of Nigeria, and Vogue Afrique Magazine.

Abdul-Rahman Esene, with over 43 years of experience in banking, investment management, and corporate finance, has held leadership roles in major institutions such as Fidelity Bank, Afrinvest, and Global Arbitrage International Inc.

Mrs Fola Akande boasts over 25 years of experience in legal, compliance, and risk management, having worked with global brands like Cadbury, Stanbic Chartered Bank, and Shell.

Akintola Ayodeji Olusoji has a distinguished 30-year career in accounting, finance, and business development, having served at institutions such as Sterling Bank, Access Bank, and Intercontinental Bank.

Obijiaku Samuel, with more than 35 years of experience in banking and treasury operations, has left a significant mark on Nigeria’s financial sector, previously working with Zenith Bank and Fidelity Bank.

Senator Farouk Bello, a seasoned banker with over 20 years of experience, has led initiatives across both the public and private sectors, including the National Assembly and Guaranty Trust Bank.

Meanwhile, the two new executive directors bring their vast expertise to the table. Ladi Oluwole, the new Executive Director of Risk Management, comes with over two decades of experience in credit and enterprise risk management, including previous roles at Bank of America. Abubakar Usman Bello, Executive Director for the Northern Directorate, has extensive experience managing corporate, retail, and public sector clients.

Speaking on the appointments, Keystone Bank’s Managing Director and CEO, Hassan Imam, expressed confidence in the new board members, stating that their wealth of experience would play a crucial role in the bank’s continued repositioning and growth.

“We are pleased to welcome the new chairman, non-executive directors, and executive directors to the board of Keystone Bank. We are confident that their extensive experience will be invaluable as we continue to reposition the bank to seize emerging economic opportunities while maintaining strong corporate governance and providing our customers with a secure and reliable banking experience,” Imam said.