BIG STORY

Stop Financing Excessive Government Debt — IMF To Central Banks

Published

2 years ago

March 5, 2023

The International Monetary Fund (IMF) has urged central banks to refrain from monetizing excessive government debt.

Debt monetization is when a government borrows money from the central bank to finance public spending instead of selling bonds to private investors or raising taxes.

The Washington-based institution, in its report titled ‘Rethinking monetary policy in a changing world’, said the ability of central banks to set monetary policy and control the economy in more volatile times is dependent on their independence.

As central banks hike interest rates and the government has to pay more for its debt, the hope is that authorities will cut back on expenditures, thereby cooling the economy and lowering inflation pressure, IMF said.

“The low-interest rates and less extreme public debt levels that prevailed after the global crisis permitted central banks to ignore what were then relatively inconsequential interactions between monetary and fiscal policy,” it said.

“The period following the 2008 crisis was one of monetary dominance—that is, central banks could freely set interest rates and pursue their objectives independent of fiscal policy.

“Central banks proposed that the core problem was not rising prices, but the possibility that weak demand would lead to major deflation.

“As a result, they focused primarily on developing unconventional policy tools to allow them to provide additional stimulus.

“Central banks also felt emboldened to pursue policies that would simultaneously meet the need for further stimulus and achieve social objectives, such as hastening the green transition or promoting economic inclusion.

“During the COVID-19 crisis, circumstances changed dramatically. Government spending rose sharply in most developed economies.”

The IMF said as spending was increasing, countries were hit by supply shocks of unprecedented proportion.

The organization said the supply shocks were largely the result of pandemic-related problems—such as supply chain disruptions.

“These added to inflation pressures. The pandemic demonstrated that monetary policy does not always control inflation on its own. Fiscal policy also plays a role,” the IMF said.

“More important, the accompanying buildup of public debt raised the possibility of fiscal dominance—in which public deficits do not respond to monetary policy.

“Whereas low debt levels and the need for stimulus allowed monetary and fiscal authorities to act in tandem following the global financial crisis, the prospect of fiscal dominance now threatens to pit them against one another.

“Central banks would like to hike interest rates to rein in inflation, whereas governments hate higher interest expenses.

“They would prefer that central banks cooperate by monetizing their debt—that is, by purchasing government securities private investors won’t buy.

“Central banks can retain independence only if they promise not to accede to any government desires to monetize excessive debt, which would then force authorities to cut spending or increase taxes, or both—so-called fiscal consolidation.”

The IMF added that central banks must remain well-capitalized to promote monetary dominance.

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BIG STORY

JUST IN: Oil Marketers Reduce Petrol Price By 11.8% To N939.50 Per Litre

Published

2 hours ago

December 20, 2024

PorscheClassy News

Oil marketers sourcing “Premium Motor Spirit”, “PMS”, also known as petrol, from the Dangote Petroleum Refinery have reduced the price by 11.8 percent to N939.50 per litre, down from N1,060 per litre.

As of Thursday, December 19, petrol was still being sold at N1,060 per litre in Lagos and surrounding areas.

However, by Friday, MRS, a leading marketer, along with others, had adjusted their prices, now selling at N939.50 per litre.

It’s worth noting that the Dangote Petroleum Refinery had earlier lowered the ex-pump price of petrol to N899.50 per litre, down from N970 per litre.

According to the refinery, this price reduction is intended to offer much-needed relief to Nigerians ahead of the holiday season.

Anthony Chiejina, the Chief Branding and Communications Officer of Dangote Group, made this announcement.

“To alleviate transport costs during this holiday season, Dangote Refinery is offering a holiday discount on “PMS” (“petrol”). From today, our petrol will be available at N899.50 per litre at our truck loading gantry or SPM,” Chiejina said.

‘‘Furthermore, for every litre purchased on a cash basis, consumers will have the opportunity to buy another litre on credit, backed by a bank guarantee from Access Bank, First Bank, or Zenith Bank.”

More to come…

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BIG STORY

EFCC Allocates N18bn For Allowances, N5bn For Travels In Proposed 2025 Budget

Published

4 hours ago

December 20, 2024

PorscheClassy News

The Economic and Financial Crimes Commission (EFCC) has announced plans to allocate N18 billion for allowances in 2025.

This figure is part of the proposed 2025 budget currently under consideration and awaiting approval by the national assembly.

As per the appropriation bill, the EFCC’s total budget for 2025 stands at approximately N62.2 billion.

This budget includes personnel costs (N38.6 billion), overheads (N20.9 billion), and capital expenditure (N2.2 billion).

Within the allowance budget, N1.7 billion is designated for “non-regular allowances,” while “regular allowances” are set at N16.7 billion.

Other proposed expenditures for the EFCC include welfare packages (N1.4 billion), fuel and lubricants (N2 billion), financial charges (N1.2 billion), construction and provision of office buildings (N1.1 billion), and maintenance services (N2.1 billion).

The EFCC also plans to allocate N4.9 billion for “local travel and transport,” with “international travel and transport” expected to cost N1.7 billion.

The proposed budget includes N800 million for the purchase of fixed assets.

On Wednesday, President Bola Tinubu unveiled the N49.7 trillion 2025 “Budget of Restoration: Securing Peace and Rebuilding Prosperity.”

In his address to the national assembly, Tinubu stated that it was time “we rewrite Nigeria’s narrative together.”

The primary focus of next year’s budget will be the defence, infrastructure, health, and education sectors.

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BIG STORY

BREAKING: Court Grants Dele Farotimi N30m Bail In Defamation Case

Published

5 hours ago

December 20, 2024

PorscheClassy News

A magistrate court in Ado-Ekiti has granted N30 million bail to Dele Farotimi, the human rights activist.

Abayomi Adeosun, the magistrate, made the ruling on Farotimi’s bail application on Friday.

The bail conditions include two sureties, who must be responsible citizens in society, with the defendant required to leave his international passport with the court. Farotimi is also prohibited from granting media interviews during the pendency of the case.

The police had accused Farotimi of “criminally defaming” Afe Babalola, a senior advocate of Nigeria (SAN), in a book titled: ‘Nigeria and its Criminal Justice System’.

More to come…

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