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Buhari’s Government Seeks For Fresh $247m External Loan |The Republican News

Muhammadu-Buhari6

File photo: Muhammadu Buhari in his office

by Omooba
 
The Federal Government will take another fresh external loan of $247.3m for the development of infrastructure, despite the country’s rising debt profile.
The Federal Executive Council made the approval at its sitting in Abuja on Wednesday.
It came just days after the International Monetary Fund raised eyebrows over Nigeria’s current N24.38tn debt, advising the country to take borrowing slowly.
Briefing State House correspondents after the meeting rose, the Minister of Finance, Mrs Zainab Ahmed, gave a breakdown of the fresh loan.
She stated that $150m would come from the African Development Bank, to be spent specifically on rural electrification projects; $50m from Africa Grow Together Fund for other electrification projects; and $20m from French Development Agency, which would be loaned to the Lagos State Government.
Lagos plans to use the $20m to build new roads and rehabilitate existing ones.
Another $27.3m IADE facility was approved as part of the ‘North Core Dorsal Regional Transmission Project.’
This will be part of the West Africa Power Pool projects with a total loan requirement of $640m.
The minister explained that the projects were to connect Nigeria, Niger, Benin Republic, Togo, and Burkina Faso “with a high voltage 330 kilowatts transmission line, to facilitate energy trade among participant countries.”
The minister, who gave more details on the approvals by FEC, said, “Council approved three memos for Ministry of Finance. First, it approved a $150m loan facility from AfDB and $50m loan from African Grow Together Fund to finance the Nigerian electrification project. The project is a nationwide initiative to be implemented by the rural electrification agency.
“The project aligns with the strategy of the Federal Government on electrification of rural communities. The project has four components: First is solar hybrid mini-grid for rural economic development, the second is productive appliances equipment for up-grid communities, and the third is energising education while the fourth component is institutional capacity building.
“The impact of the project when fully implemented, about 500,000 people will be able to have access to electricity for about 105,000 households. The maximum power that will be generated will be 76.5 megawatts installed generating capacity part of which is 68,000 megawatts of solar.
“Eight universities will benefit from this scheme and about 20,000 small, micro, medium enterprises across different communities in the nation.
“The second approval is the North Core Dorsal Regional Transmission Project. This is a project that is part of the pipeline for the West Africa power pool priority projects. The intention is for the creation of a regional power pool in the region of West Africa. The pool project aims to connect Nigeria, Niger, Benin Republic, Togo, and Burkina Faso with a high voltage 330 kilowatts transmission line, to facilitate energy trade among participants.
“The project is in the total sum of $640m, out of which each of the four countries involved has a component. Nigeria has the smallest component in this pact, which is a total loan of $27.3 m IADE facility, a concessionary loan. This is a loan that the four countries are taking together; the other three countries have concluded theirs. So, this is one of the final stages for Nigeria to conclude its process.”   (Punch)
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Nigeria Cannot Repay Loans – IMF |The Republican News

IMF

International Monetary Fund

Isaac Anumihe

Apparently worried by the Federal Government’s refusal to heed its advice on loan sustainability, the International Monetary Fund (IMF), yesterday doubted Nigeria’s capacity to repay its rising debt stock.

The Fund’s anxiety over Nigeria’s loan repayment ability may have been triggered by President Muhammadu Buhari’s recent approvals to his ministers to go all out to borrow from international lenders to fix rail and road infrastructure.
It was against this backdrop that the Minister of Transportation, Mr Rotimi Amaechi, opened negotiations with India and Russian Exim Bank to borrow $46 billion for the projects.

But speaking at the public presentation of Spring 2018 Regional Economic Outlook for Sub-Saharan Africa, IMF said the country has to increase domestic revenue. “The number of countries in debt distress has increased. From six countries in 2014 to eight in 2015; to 10 in 2016, and today 15 countries. These are low-income economies,” IMF senior resident representative and mission chief to Nigeria, Amine Mati, said.

“Now, I know the question that is going to come from here is: Where is Nigeria? Nigeria is not considered a low-income economy. Nigeria’s debt stock figure, which is 20 to 23 percent of the gross domestic product, is still quite low by any standard. The issue is capacity to repay the debts. So, interest payment to revenue is an issue. “There is a lot that can be done to increase revenue very quickly. If you look at all the various forms of taxation, you can take another look at property tax, then you can have tax administration and improving compliance. You know, in Nigeria, complying with many of the taxes is still very low.

“We think that for the region, there needs to be three to five percent Gross Domestic Products (GDP) growth is needed. How do you get there? In Nigeria, you can remove a lot of exemptions and expand income taxes.
“Those are the types of measures that, as part of a comprehensive package, can make the difference in increasing revenue mobilisation,” she said.  (The Sun)

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Nigeria Leaves AfCFTA Despite Huge Economic Benefits To Region |RN

 

african-continental-free-trade-area1

  • Says intra-Africa trade moved up from below 10% to almost 20%

Juliana Taiwo-Obalonye, Washington DC

The International Monetary Fund (IMF) has said in spite of Nigeria, Africa’s biggest economy, opting out of signing on to the African Continental Free Trade Area (AfCFTA), the benefits of the trade pact to the region are still enormous.

It noted that in recent years there has been a significant improvement in intra-Africa trade, which has moved up from below 10 percent to almost 20 percent.

Abebe Aemro Selassie, Director of the IMF’s African Department, said this while briefing journalists on the economic development of the macroeconomic situation in sub-Saharan Africa, and the policies and reforms needed to ensure a stronger and durable recovery, at the ongoing IMF/World Bank Spring meetings in Washington DC.

President Muhammadu Buhari had cancelled his trip to Kigali, Rwanda, to attend an Extraordinary Summit of the African Union in March to sign the framework agreement for establishing the African Continental Free Trade Area.

Buhari had said his administration will not be in a hurry to enter into any agreement that would make the country a dumping ground and jeopardise the security of the nation.

Consequently, he had set up a committee to review the Continental Free Trade Area (CFTA) framework agreement.

Forty-four African countries had gone ahead to agree to form a $3 trillion continental free-trade zone encompassing 1.2 billion people, even as the continent’s two biggest economies, Nigeria and South Africa, were among countries that withheld their consent.

Selassie said on Friday at the IMF headquarters that in recent years “we have seen significant Improvement in intra-Africa trade, [which] has moved up from below 10 percent to almost 20 percent of the region’s trade.

“What is interesting is that much of what Africa trades with each other tend to be more processed, more manufacturing goods, and exactly more diversified exports that Africans are thinking.

“So we think that the CFTA, when fully implemented, coupled with the removal of non-tariff barriers, facilitating infrastructure should connect markets…

“Overall we feel that CFTA is an important agreement that many African countries will benefit from.”

The decision to establish the AfCFTA was taken in 2012 by all Heads of State and Government of the African Union at their 18th Ordinary Session.

AfCFTA is the first step in the implementation of AU Agenda 2063: the “Vision” for an integrated, prosperous and peaceful Africa.  (The Sun)

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IMF Forecasts Trouble Ahead As Solid Global Economic Growth Poised To Slow |RN

Andrew Mayeda
                 © Shutterstock 

The International Monetary Fund predicted the world economy’s strongest upswing since 2011 will continue for the next two years, but warned the seeds of its demise may have already been planted.

The fund on Tuesday left its forecasts for global growth this year and next at the 3.9 percent it estimated in January and raised its outlook for the U.S. as Republican tax cuts take effect.

Beyond that horizon, it was more pessimistic, projecting global growth will fade as central banks tighten monetary policy, the U.S. fiscal stimulus subsidies, and China’s gradual slowdown continues.

“Global growth is projected to soften beyond the next couple of years,” the IMF said in its latest World Economic Outlook report. “Once their output gaps close, most advanced economies are poised to return to potential growth rates well below pre-crisis averages, held back by ageing populations and lacklustre productivity.”

The IMF warned the expansion could be derailed if countries resort to tit-for-tat trade sanctions.

“The first shots in a potential trade war have now been fired,” IMF Chief Economist Maurice Obstfeld said in a foreword to the fund’s outlook, reiterating the IMF’s warning earlier this month that the global trading order is in danger of being “torn apart.”

“Conflict could intensify if fiscal policies in the United States drive its trade deficit higher without action in Europe and Asia to reduce surpluses,” he said.

Maurice Obstfeld, Economic Counsellor and Director of the Research Department at the IMF, holds a press briefing on the World Economic Outlook at IMF Headquarters in Washington, DC© SAUL LOEB/AFP/Getty Image Maurice Obstfeld, Economic Counsellor and Director of the Research Department at the IMF, holds a press briefing on the World Economic Outlook at IMF Headquarters in…

In a press conference later Tuesday, Obstfeld called the current trade frictions “more of a phoney war,” referring to the period of limited conflict at the start of the Second World War. “There’s still room for countries to engage in a more multilateral set of discussions to take advantage of the set of dispute resolution mechanisms that are in place to avoid an intensification,” he said, adding that all countries would lose in a trade war.

Investors with $543 billion of assets are the least optimistic about global growth momentum since the U.K. voted to leave the European Union, according to Bank of America Merrill Lynch. Just 5 percent of money managers project the international economy to be stronger in the next 12 months, the lowest level since June 2016, according to the bank’s April survey. Underscoring diminished growth momentum, earnings expectations have peaked.

Good Times

a screenshot of a cell phone: Solid Growth            © Bloomberg Solid Growth

Governments should take advantage of the good times to make structural reforms and put in place tax policies that raise the potential output of their economies, Obstfeld said.

The IMF outlook is a reality check for finance ministers and central bankers from its 189 member countries as they gather this week in Washington for the fund’s annual spring meetings. President Donald Trump’s war of words with China over trade will be front and centre. The U.S. has threatened to slap tariffs on as much as $150 billion in Chinese goods, while Beijing has vowed to retaliate in kind.

But the guardians of the global economy face challenges beyond trade, including the end of years of easy central-bank money and a world debt pile that has climbed to a record $164 trillion. Financial markets have been choppy this year, with U.S. stocks down slightly after a strong performance in 2017.

Broad Recovery

Globally, growth is being driven by a surge in business spending and a recovery in trade volumes, according to the IMF. Last year, the expansion covered two-thirds of countries, accounting for three-quarters of global output, making it the broadest upswing since 2010 when the world was coming out of the financial crisis.

But there are signs the synchronized recovery may be becoming a little more uneven, at least in the short term, with the U.S. charging ahead, fueled by tax cuts and government spending.

International Monetary Fund logo             © Reuters International Monetary Fund logo

 

The U.S. economy will grow 2.9 percent this year, the IMF said, up 0.2 percentage point from the fund’s forecast in January. The U.S. will expand at a 2.7 percent pace next year, also up 0.2 points from three months ago.

The IMF’s revised U.S. forecasts include the benefits of the tax cuts passed in December, as well as a $1.3 trillion spending bill. However, the fund said growth will be lower than expected after 2022, due to the higher budget deficit and the expiry of fiscal stimulus.

Faster Growth

The IMF also raised its forecast for the euro area, predicting the currency zone will grow 2.4 percent in 2018, up 0.2 points from January. The fund left its forecast for euro-zone growth next year unchanged, at 2 percent.

China will grow 6.6 percent this year and 6.4 percent in 2019, the fund said. Both forecasts were unchanged from three months ago.

The world’s second-biggest economy will continue re-balancing away from investment and manufacturing toward consumption and services, the IMF said, warning that rising debt clouds the nation’s medium-term outlook.

The IMF also left its outlook for Japan flat, predicting the nation will expand at a 1.2 percent pace this year and 0.9 percent in 2019.

India will grow 7.4 percent this year and 7.8 percent in 2019, both unchanged from January.

The fund cut its forecast for Canada to 2.1 percent this year, down 0.2 points from three months ago. The IMF also lowered its outlook for the Middle East and North Africa this year by 0.2 points, to 3.2 percent.

(Bloomberg)

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Africa To Account For Half Of Global Labour Force By 2030, Says Lagarde |RN

The Managing Director, International Monetary Fund (IMF) Ms Christine Lagarde, says by 2030, over half of new workers entering the global labour force will come from Africa.
A statement obtained from the Economic Commission for Africa’s (ECA) website on Tuesday said Lagarde made the prediction at a special event hosted by the commission in Addis Ababa, Ethiopia.
The event was themed: Economic challenges and opportunities facing the African continent; the role of technology in supporting the region’s achieve – more inclusive growth.
Lagarde said that youths in Africa comprise 75 per cent of the working age population. “With the right strategy, this incredible surge could translate into a virtuous cycle of economic growth and development,” she said.
She, however, cautioned that hundreds of millions of people would need better healthcare, more educational opportunities and jobs, especially in career paths that had not yet been invented.
“When I travel in Africa, I never worry that the dreams of the next generation are not big enough.
“The only question is whether we can create an environment where those dreams will have the chance to be realised.”
Lagarde expressed concern over uneven growth and slowdown in some countries due to lower commodity prices.
She lamented that on a Gross Domestic Product (GDP) per capita basis, 15 countries in the continent were expected to experience a decline this year.
“Achieving growth that is stronger, lasting and more inclusive – one that leads to benefits and higher living standards – will require diversification.
“And the right balance between investment and debt sustainability and harnessing technology to accelerate economic and social development.
“Technology does not hold all the answers in fact, technology often raises new questions, including the impact of automation.
“However, there is no doubt that technology is an important part of the story,” she said.
Lagarde said that governments could do more than just encourage innovation, they could also help lead the way themselves.
She said that governments could create a foundation for innovation by streamlining regulations “so that everyone plays by the same rules and entrepreneurs are rewarded for their ingenuity.’’
“Doing both – creating the right environment for technological innovation and leveraging digital tools leads to more transparency, stronger accountability and delivery of a better life for every citizen,” she said.
Citing an example, she indicated that updating payment systems from cash to digital could lead to savings of about one per cent of GDP, adding that in some places in Africa the potential was even higher.
The Executive Secretary, ECA, Ms Vera Songwe said that the fall in GDP per capita in many countries was alarming for inclusive growth, adding that the biggest challenge facing Africa was how to increase the standard of living of its populations.
“With the huge demographic bulge Africa is facing, can Africa dream of moving more countries into middle-income status?
“Do we have to start working on a world where with the current population dynamics, Africa is caught up in a demographic trap where growth does not lead to increases in GDP per capita?”
To accelerate development, she called for more ambitious growth numbers, stating that double-digit growth rates were now needed to respond to these challenges.
“This is the only way to invest while maintaining appropriate macro balances such as the debt to GDP.
“As interest rates rise in the West and threaten to reduce Foreign Direct Investments (FDIs) flows to Africa, we have to find ways of financing our development.”
She proposed the need to collect more taxes, broadening the base, making all savings more productive and investing resources efficiently and effectively.
Lagarde’s official visit to the ECA is the first of its kind by a leader of the IMF, the statement said.
Present at the event are representatives from the private sector, academia, university students, UN staff and the diplomatic corps. (NAN)

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Nigeria Still Investors’ Destination, IMF Says |The Republican News

Adeosun-Kemi

Minister of Finance, Kemi Adeosun

The International Monetary Fund on Wednesday said Nigeria remained a destination for investors.

The Senior Financial Sector Expert, Debt and Capital Market Instruments Division, Monetary and Capital Markets Department, Miriam Tamene, said this in a statement issued by Securities and Exchange Commission’s management in Abuja.

Tamene said this when she led a team on a visit to the SEC office in Abuja.

She noted that the IMF was pleasantly surprised to receive numerous indications of interests by investors eager to invest in Nigeria.

She, however, said many of them still nursed the fear that they might not be able to retrieve their funds anytime they decide to exit.

She urged monetary and regulatory authorities in Nigeria to formulate policies that would bring down the inflation rate in the country as well as increase access to domestic funds.

This, Tamene noted, would ensure that the economy attain further growth in 2018.

“At the annual meetings of IMF, we were pleasantly surprised when we saw many investors interested in the Securities Market in Nigeria.

“A lot of people thought that Nigeria is still investors’ destination, the main concerns most of them had was the fear that they may not be able to take out their money anytime they want to, hence they are being very watchful.

“Investors are interested in Nigeria, but with difficulties they had in getting their money out recently, that confidence is not there yet.

“It has improved though, but they are still watching. It is still so much fragile and not what they can take for granted just yet,” she added.

The statement also quoted the Acting Director-General of SEC, Dr. Abdul Zubair, as saying, “The future outlook appears good, as several initiatives have been floated by the SEC to help grow the capital market.”

Zubair said the initiatives would increase investors’ confidence and more initiatives would be introduced subsequently to ensure the Nigerian capital market remained one of the best in the world.

The IMF team was in Nigeria for consultations to get update on developments covering all financial transactions as well as key sectors of the Nigerian economy.

The report of their consultations is expected to be presented to the IMF Board in February 2018. (NAN)

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Beware Of Nigeria’s Fraudulent Anti-Corruption Society Groups, Okonjo-Iweala Warns IMF |The Republican News

Ngozi-Okonjo-Iweala1

Dr Ngozi Okonjo-Iweala

NIGERIA’S former Minister of Finance and chair of Gavi, the Vaccine Alliance, Dr Ngozi Okonjo-Iweala, on Sunday, charged the International Monetary Fund (IMF) and other world bodies to be wary of dealing with civil society organisations (CSOs) claiming to be fighting corruption and promoting transparency in the country.
She said a number of the anti-corruption CSOs currently in the country were actually fronts floated by corrupt people in government in order to give those in power corridors a fake clean bill of health on transparency and open government.
Okonjo-Iweala spoke on Sunday in Washington DC, the United States on the theme Fighting Corruption, at the conclusion of the annual meetings of the World Bank and the International Monetary Fund (IMF).
“From outside, you can’t really do so much. You really need to identify the institutions, the people and those who are willing to work on this reform and support them.
“But you need to ensure you are working with the right CSOs and NGOs. We have a joke in my country that you can have NGI instead of NGO. NGI is non-governmental individuals instead of non-governmental organisations.
“The people you are fighting are also very smart. They are not just sitting back. They also develop their own NGOs to serve as a front for them; people who can certify them that they are very accountable for what they are doing.
“So, you have to be careful. You have to be able to identify those who are the proper people. And we have many NGOs in Nigeria and in the African continent who are fighting really hard that to make the governments accountable. But be very careful not to get bogged down.
“Sometimes people from outside think this is needed to sort out who is who and who is what? Who is telling you the truth and who is making up a story to cover up,” she said.
The former Minister canvassed the strengthening of institutions as well as the e-procurement as a veritable means to fight corruption in Nigeria and other places.
She recalled that with the support of the World Bank and IMF, it took Nigeria 10 years “to build Government Integrated Financial Management System in Nigeria, to get away from cash-based transactions.”
She advised the IMF to identify the real anti-corruption CSOs and support them, adding that these groups had developed tools and frameworks to promote open government and transparency.
“The more of e-procurement we can build institutionally and strengthen the institutions along that line, the more we will be able to fight corruption.
“We really need a systematic plan about fighting corruption. The big story about corruption scandals are the ones people like to read. But actually, fighting corruption and putting the necessary system in place is very uns3xy. It takes time,” she said.   (Tribune)

 

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