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Debt Servicing To Gulp 123% Of 2023 Revenue — World Bank

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The World Bank has projected that debt servicing will gulp 123.4 percent of the Federal Government’s revenue in 2023.

This was according to a presentation made by the new World Bank Lead Economist for Nigeria, Alex Sienaert, in November 2022, which was obtained by our correspondent.

The document was entitled, ‘Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustainable Development Results.’

The document projected that debt servicing would gulp 100.2 percent of Federal Government revenue by the end of 2022.

This was a decline from the earlier projection in its October Africa’s Pulse report, which is a biannual analysis of the near-term macroeconomic outlook for the region, published during the World Bank/IMF Spring and Annual Meetings in April and October.

In Africa’s Pulse report, the Washington-based bank said that Nigeria’s debt service to revenue ratio could stand at 102.3 percent by the end of 2022.

It described the public debt in Nigeria as concerning due to the rising debt service-to-revenue ratio.

However, the situation would be dire in 2023 as debt surviving would exceed 118 percent of revenue reported in the first four months of 2022.

In his presentation document, the World Bank lead economist for Nigeria noted that borrowing more money was not the solution for Nigeria.

The document read, “Borrowing more is not the solution: debt costs are rising rapidly, squeezing non-interest spending.

“Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending.”

The PUNCH recently reported that Nigeria’s public debt rose to N44.06tn in the third quarter of 2022, with the country struggling with a repayment burden.

According to a press statement published on the website of the Debt Management Office, the total public debt stock rose from N42.84tn recorded in the second quarter to N44.06tn in the third quarter of 2022.

This showed that there was a 2.85 percent increase quarter-on-quarter, with Nigeria acquiring N1.22tn debt within three months.

The DMO said that the increase in public debt was due to new borrowings by the Federal Government to part-finance the deficit in the 2022 Appropriation Act, alongside new borrowings by sub-nationals.

It also noted that the total public debt stock consisted of domestic debt of N26.92tn and external debt of N17.15tn.

The World Bank recently said that Nigeria’s debt, which might be considered sustainable for now, was vulnerable and costly.

According to the Washington-based global financial institution, the country’s debt was also at risk of becoming unsustainable in the event of macro-fiscal shocks.

The bank had said, “Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria.

“While currently the debt stock of 27 percent of the Gross Domestic Product is considered sustainable, any macro-fiscal shock can push debt to unsustainable levels.

“However, the debt to the GDP in Nigeria is rising quickly, and the total stock of debt in absolute value has almost doubled between 2016 and 2020, and without a policy change is expected to reach 40 percent of the GDP by 2025.”

The bank further expressed concerns over the nation’s cost of debt servicing, which according to it, disrupted public investments and critical service delivery spending.

Speaking at the launch of the World Bank’s Nigeria Development Update titled, ‘The Urgency for Business Unusual,’ the Minister of Finance, Zainab Ahmed, admitted that Nigeria was struggling to service its debt.

She said, “Already, we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate, so it is a very difficult situation.”

A Professor of Development Macroeconomics at the University of Lagos, Prof Olufemi Saibu, criticized the government for over-borrowing.

He said, “I think we are over-borrowing. We continue to rely on international benchmarks which make us lazy in terms of revenue generation.”

BIG STORY

BREAKING: Nigeria’s National Grid Collapses Again, 10th Time In 2024

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Nigeria’s national grid has collapsed again for the 10th time in 2024.

This was revealed by the National grid’s X handle.

This revelation was made after several Nigerians complained of a sudden disappearance of power supply in their houses.

 

More to come…

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BIG STORY

Oil Marketers Counter Dangote Refinery On Substandard Products Claim, Say “It’s False”

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Oil marketers, under the umbrella of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), have rejected claims by the Dangote refinery suggesting that cheaper petrol sold by other marketers is substandard.

On November 3, the Dangote refinery stated that any oil marketer offering petrol below its price is likely importing inferior products.

The refinery emphasized that its prices are aligned with international benchmarks and the rates at which the Nigerian National Petroleum Company (NNPC) Limited sells to local marketers after deregulation.

In response, DAPPMAN’s executive secretary, Olufemi Adewole, issued a statement on Tuesday, asserting that none of the association’s members are involved in the importation of low-quality products into Nigeria.

“We have said this for the umpteenth time, and it bears repeating, those in the downstream sector business of petroleum products trade are patriotic Nigerians who will not shortchange Nigerian citizens for filthy lucre,” Adewole said.

“Our members are in this business to add value to the businesses of their fellow Nigerians and not to defraud them.

“Prices of products in the international market are dynamic as they are dictated by prevailing circumstances at every given situation. We calculate our landing costs based on the dynamics of market forces, and the templates are always in the public domain.

“To claim that if the landing cost of imported product happens to be lower than that of the refinery indicates importation of low quality product is not only preposterous, but also fallacious. In any case, the management of the refinery has, until now, kept its cost and prices close to its chest and put it away from public scrutiny.”

Adewole said the refinery’s comment is targeted at projecting DAPPMAN’s members negatively before the public.

He also said such claims cannot help the company’s desire to have oil marketers patronise its products.

“What will ensure such patronage is transparency, fairplay, and readiness to compete with others, including foreign refineries, on an even keel and on a level playing field,” he added.

The DAPPMAN executive secretary said the company’s claim that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) does not have a modern laboratory to test imported fuel is false.

“A regulator must have access to modern, state of the art laboratory at every point in time, whether owned by it or others. Such laboratories must be of world standard,” he said.

“The regulator, and indeed, the marketers, have access to such world-class laboratories, which include: SGS, Inspectorate, and Interterk, among others.

“If fuel marketers were bringing in off-spec fuel, this wouldn’t have been difficult to detect. How many vehicles in the last one year have reported engine problems resulting from bad fuel? Where are the reports about environmental pollution occasioned by the usage of low quality fuel?

“It is a false statement to claim that any product brought in with a landing price lower than the price offered by the Dangote Refinery is a substandard product.

“It is the management of the refinery that will need to tweak its template to reflect the crude for naira sales and other incentives which the federal government has graciously extended to the refinery.”

Adewole also said the members were surprised to know that the refinery has a 500 million litres fuel reserve.

“We were surprised because we believe that if the Refinery has such huge stock, it is the marketers that should be put in the know first,” the executive secretary said.

“Secondly, it was even more surprising given that the news came about the time the refinery was working on rationing what each marketer could pick from the refinery. If they had such huge stock, how is it then that they are rationing what marketers could buy.”

Adewole said the association will continue to play by the rules and will not be tired of advocating for a level playing field, and a competitive and transparent sector.

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BIG STORY

Doyin Okupe Reacts To Peter Obi’s Viral Video, Says I Cannot Support Him Again

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Doyin Okupe, the former director-general of the Labour Party (LP) presidential campaign in 2023, says he “cannot support” Peter Obi again.

Okupe spoke on Monday during an interview with Seun Okinbaloye on Channels Television’s Politics Today.

He was reacting to a viral clip of Obi commenting on how the country’s economic situation offers little relief to people in the south-west, despite President Bola Tinubu being from the zone.

“Let us talk about what is happening today. Rice is about N100,000. We are not even sure where we are going to be. ‘It’s our turn’, ‘he is a Yoruba man’ — ask the people in Ogun, here is there any place you people buy bread cheaper?” Obi said in the viral clip.

The video generated mixed reactions on social media, with some supporting Obi’s comments while others criticised him.

Adding his voice to the criticism, Okupe described the former LP presidential candidate’s remark as an “insult” to people in the south-west.

He said Obi’s statement publicly demeaned the south-west, even though “eminent Yoruba people” had supported him during his presidential campaign in 2023.

“When Obi made that statement, it insulted us. I am a Yoruba man; I left everything and followed Obi.

“For the first time, Obasanjo left his circle of influence and deviated to support Obi,” Okupe said.

“I do not regret supporting Peter Obi. But now I cannot do it again. The reason why I did it was because we agreed that a southern president must emerge.

“I was approached that if a southern president must emerge, which zone must it come to? I said the south-east.

“If all these eminent Yoruba people supported you, why now bring us down publicly? It is wrong.”

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