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To Accommodate Fresh Loans, FG Raises New Borrowing Limit From N33tn To N61tn

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With the new borrowing limit set by the Federal Government, Nigeria can expand its current debt portfolio from N33.11tn to N61tn.

The new borrowing limit contained in a document, Medium Term Debt Strategy, shows that Nigeria has raised its borrowing limit from 25 percent of the Gross Domestic Product to 40 percent of the GDP.

This revelation came even as the Senate gave new approvals to the Federal Government to borrow $8.33bn and €490m from external sources.

As of December 31, 2020, the National Bureau of Statistics put the country’s GDP at N152.32tn. Thus, forty percent of the current GDP is N60.93tn.

Twenty-five percent of the current GDP is N38.08tn, an amount which the nation may have surpassed in debt given that there are loans which the nation has already secured but are not included in the debt stock because they have not been drawn down.

This means that Nigeria can borrow as much as N60.93tn. Thus, with Nigeria’s current debt currently at N33.11tn, the new borrowing limit has given the country the leeway to expand its debt portfolio by up to N27.82tn.

Director-General of the Debt Management Office, Patience Oniha, confirmed the new borrowing limit in a telephone interview with one of our correspondents on Thursday.

Oniha said, “The new debt limit is 40 percent. It was approved as part of the MTDS 2020 – 2023. The document and highlights are on our website.”

The DMO boss also dismissed insinuations that the new approval given by the Senate may have taken the country beyond the set borrowing limit.

She said, “The latest loan approval is within 40 percent. Secondly, note that these loans will be disbursed over time and only what is disbursed is included in the debt stock.”

The debt strategy document said, “The debt limit was increased to accommodate new borrowings to fund budget, issuance of more promissory notes and the proposal to transfer some State Owned Enterprises’ debts, including AMCON to the FGN’s Balance Sheet in line with the IMF’s guidelines, and the proposed inclusion of ways and means.

“This limit is provided in Section 12(1) of the Fiscal Responsibility Act (FRA), 2007, and efforts are to be made to ensure compliance, except if in the opinion of the President, there is good reason to exceed the threshold, as further provided in Section 12(2) of the Act.”

The primary objective of Nigeria’s MTDS, 2020-2023 is to guide the borrowing activities of the FGN in the medium-term, the document said.

The framework compares alternative funding strategies available to the government as it pursues the desired structure of the debt portfolio that reflects the selected strategy considering the costs and risk trade-offs in the medium term.

The document said, “The main thrust of this new strategy is to moderate the level of debt-related risks, reduce the cost of debt servicing, maximize leveraging on funding from multilateral and bilateral sources, subject to availability, whilst ensuring debt sustainability, amongst other objectives.”

According to the document, the DMO is not in control of the growth in GDP and FGN revenue, but its assessment of the performance of Nigeria’s total public debt to GDP shows that the debt portfolio remains within a sustainable limit.

It said, “The ratio of Total Public Debt Portfolio to GDP was 19.00 percent as at December 31, 2019, compared to 13.02 percent in 2015, remaining within the Country-Specific Debt Limit of 25 per cent.

“Although the ratio has increased steadily due to new borrowings and slower growth of the GDP, this ratio for each of the years – 2016 to 2019, was well below the World Bank/IMF’s recommended threshold of 55 percent for countries in Nigeria’s peer group and ECOWAS convergence threshold of 70 per cent, as well as within the Country’s Specific Debt Limit of 25 per cent.”

According to the National Debt Management Framework 2018 -2022 document on the DMO website, Nigeria is a Lower-Middle-Income country.

According to the document, Debt Sustainability Analysis carried out by the DMO uses the joint World Bank/IMF Debt Sustainability Framework for Low-Income Countries.

According to this sustainability framework, medium economies on the composite indicator must have a liquidity ratio for external debt service to revenue of 15 percent.

The Head of Economics Department, Pan-Atlantic University Lagos, Dr Olalekan Aworinde, in an interview with one of our correspondents, said that there were various measures of sustainability.

He said, “There is the solvency ratio; there is also the liquidity ratio. Nigeria might be claiming to be solvent in terms of debt to GDP ratio, but we have to critically look at the debt service to revenue ratio. If it is very high, it is not good for the debt sustainability of Nigeria.

“The debt service to revenue ratio is around 72 per cent, and that shows that 72 percent of government revenue is used to service debt.

“The truth is that the government will continue to borrow, because the level of their expenditure, the total recurrent and capital expenditure, is always on the increase over the years.

“The government has to finance this expenditure; once they can only spend less than 30 percent of the revenue they are getting, the fact is that the remaining will have to be financed by some other funds, leading to a budget deficit.

“The end product is that the FG will continue to borrow, and probably sell off some of their properties or print money.

“Earlier this year, we were told that the Federal Executive Council had to rely on printing money to give to the local and state government. This is staring us back in the face: we can see it in the high level of inflation, high level of prices of goods and services in Nigeria over time. The value of the naira keeps depreciating every day. These are some of the likely possibilities in the future.”

Aworinde said that debt was good when utilized for the right purpose and that countries like the United States incur debts too, but these debts yield returns.

He added, “It has a lot of implications, there are positive sides to it and there are also negative sides to it. The government is borrowing and probably one of the reasons they want to borrow is for capital expenditure. If the debt they are incurring is for capital expenditure and it is well utilized, it will eventually translate into growth.

“More importantly the interest rate they are likely to pay back and the returns they are likely going to get on that particular investment if it is greater than the interest rate in terms of servicing it is going to be better.”

He added, “But my worry here is that if these particular debts are not used for capital expenditure if it is used for recurrent expenditure, it won’t translate to growth. “Another concern is that in the future, Nigeria will have to pay back this debt, and if that happens, they will increase the tax rate. If they are increasing the tax rate, the tendency is that it will become a burden on the future generations.”

A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said the level of revenue and usage of the loan were more important than the loan ratio to the GDP.

He said, “Are you going to be able to pay the loan you are taking? If you are saying we are safe with loans to GDP, we may not be safe as such. If we are actually a producing economy, there would not be a problem.

“I don’t worry about loans, but what have we done with the loans. We should be looking at how to have the infrastructure to help the economy to grow.”

He added that the servicing of loans in Nigeria now was taking so much chunk of the country’s money.

BIG STORY

FG Orders Activation of COVID-19 Isolation Centres Nationwide

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The federal government has directed all COVID-19 Isolation Centres across the country to immediately activate their facilities in anticipation of a possible spike in infection. Minister of Health, Dr. Osagie Ehanire, gave the directive yesterday in Abuja at a media briefing on the COVID-19 update.

The move came as the government said it had identified 10 positive cases of COVID-19 Delta variant in passengers who came in mostly from the Lagos and Abuja airports. It stressed that henceforth, stringent measures would be put in place to monitor incoming passengers from countries where the virus had become more virulent, maintaining that anyone who breaks the isolation rule would be prosecuted.

The minister said the federal government had deployed rapid testing kits at all official entry points to the country, including the Idioroko and Seme border posts, to ensure stricter monitoring and prevention of disease importation into Nigeria.

Ehanire disclosed that in the past 24 hours, the world had witnessed an increase in reported cases of the virus across a significant number of countries, due to the high transmissibility of the Delta Variant. He said there was a rising incidence of COVID-19 in the country, adding that treatment bed occupancy is also recording an increase given the established emergence of a third wave.

“We have already asked our hospitals to reactivate all their isolation centers and prepare them for any possible surge,” he said.

According to Ehanire: “As of July 25, 2021, we have confirmed a total of 170,895 COVID-19 cases and 2,132 fatalities. There are 4,180 active cases across the country, including 216 new cases recorded in the last 24 hours from seven states; 108 cases from Lagos State, 96 cases from Akwa Ibom State, four from Oyo, three from Rivers, two from Edo, and one each from Ekiti and Kano states.”

He regretted that despite the evidence of the emergence of a third wave of the pandemic, citizens continued to refuse adherence to public health advisories.

The minister said in preparation for the anticipated rise in cases, the Federal Ministry of Health had taken steps to urgently scale up and enhance local oxygen capacity before any increase in oxygen consumption. He said the government had invested directly and strategically in ensuring oxygen availability to avert the incidence of oxygen insufficiency for COVID-19 patients in the country.

On the country’s push for COVID-19 vaccine sufficiency, Ehanire said Nigeria was expecting, “over 29 million Johnson & Johnson vaccines purchased by the government of Nigeria through the African Union AVATT facility; and over four million Moderna and almost 700, 000 AstraZeneca vaccines through the COVAX facility from bilateral donations from the governments of the United States and the United Kingdom; as well as Pfizer and Sinopharm from both bilateral agreements and through the COVAX facility.”

The minister allayed fears over the recent donation of the Sinopharm COVID19 vaccine by the Chinese government, saying the National Agency for Food and Drug Administration and Control (NAFDAC) has been asked to subject the vaccine to regulatory test for the needed approval.

Ehanire also said the Johnson & Johnson vaccine, which is a one-dose shot, would be advantageous in the Nigerian context, with weak Civil Registration Vital Statistics (CRVS) and a nomadic population.

According to Ehanire government expects to take delivery of the vaccines this quarter, with the Johnson & Johnson expected in August.

Earlier, the minister said the country had stop vaccination in July 10, because it ran out of vaccine doses.

When asked about efforts to commence manufacturing of vaccines in the country, he said Nigeria had put up a good case for citing a vaccine manufacturing company in the country.

Ehanire added that the government had also approached prominent Nigerians in the private sector to support the venture.

He explained, “We are talking to eminent Nigerians, we are waiting for the next step to put up a concept note and business plan. We are working with a company that the federal government owns 49 percent equity and the company will be the only company we will present as the one to do the manufacturing and government will support them in many ways to get the technical transfer and to be the one supported to produce the vaccine.”

While giving an update on COVID-19 testing and treatment around the country, the Director of Disease Surveillance and Epidemiology, Mrs. Elsie Ilori, said, “So far we have identified 10 Delta variants of COVID-19 in the country. The Delta variant is more virulent than the normal one and the symptoms it presents are not in consonance with what we are used to, that is why we need to be careful.”

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BIG STORY

BREAKING: Cotonou Court Sends Sunday Igboho Back To Prison After 13 Hours Trial

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Cour De’Appel De Cotonou has returned Yoruba Nation agitator, Sunday Adeyemo, popularly known as Sunday Igboho, to police custody pending further investigation.

The activist was returned to cell after a 13-hour hearing, which ended around 11:20 pm on Monday.

The case was heard behind closed doors as the court limited attendance to lawyers, Igboho’s wife, Ropo, and a few others.

According to The Cable, Igboho would not be set free. “The problem is with the extradition, and there is a lot of politics going on”.

This means no immediate extradition for the Yoruba youth leader, who has been declared wanted by the government of Nigeria.

It is however unclear if a political solution will be reached between both states or not.

Journalists, monarchs, and supporters who came to court for the case were barred from witnessing his hearing.

They then hung around the court premises until about 7 pm when armed security operatives came to court to eject anyone who was not a person of interest.

Igboho and his wife, Ropo, were arrested at an airport in Cotonou last week and detained at the request of the Nigerian government.

His lawyers requested the release of his wife on the grounds that she had committed no offense against the Nigerian state.

On Thursday, the court answered the prayers and ordered her release and a return of her passport.

Igboho was taken to detention, where he has been up until Monday.

The charges against the Yoruba Nation activist border on arms smuggling, inciting violence, and calling for a secession of the Yoruba from the Nigerian state.

Igboho and his lawyers have denied all allegations leveled against him.

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Sunday Igboho’s Trial Resumes Behind Closed Doors In Cotonou

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Yoruba Nation agitator, Sunday Adeyemo, popularly called Sunday Igboho, is currently being tried behind closed doors at the Cour D’Appel De Cotonou.

Journalists and his supporters were barred from the court proceeding.

However, his supporters said they were not harassed nor sent out of the court premises.

The Beninese court had last Thursday adjourned Igboho’s case till Monday after his five lawyers failed to convince the prosecutor that he had no case to answer.

The Beninese authorities have, however, released Ropo, the agitator’s wife, who was arrested with the 48-year-old activist on Monday, July 19, 2021, by the International Criminal Police Organisation at the Cadjèhoun Airport in Cotonou, Republic of Benin on their way to Germany.

On his part, Igboho was returned to police custody.

Igboho is in court for possible extradition charges.

Many supporters of Yoruba Nation agitator had thronged the court on Monday to witness the trial of the activist.

This is despite earlier warnings that Benin Republic courts are not used to large crowds during sittings.

Some of the supporters had arrived in the Benin Republic on Sunday with a Yoruba group offering free accommodation.

It was gathered that the Federal Government would be presenting extradition charges against the Yoruba rights activist today.

According to reports, the Nigerian government would possibly be presenting a piece of video evidence.

Ibrahim Salami, one of the Cotonou, Benin Republic-based lawyers of Sunday Igboho had said on Saturday said that extradition charges were been expected from the Nigerian government.

The counsel insisted that only a Nigerian passport was found on the Yoruba rights activist, adding that he was not being tried for possessing a fake passport.

Following the bloody raid on his Sooka residence in Ibadan, Oyo State, the Department of State Services had earlier claimed local and international driving licenses in his name. ATM cards, a German residence permit No. YO2N6K1NY bearing his name, and a passport were allegedly recovered.

The lawyer had said, “When he left Nigeria, he took the backdoor into Benin. It was at the airport that security operatives stopped him that he was on the watchlist. He didn’t go against any law in Benin Republic. They didn’t find any Beninese passport on him. He had a Nigerian passport with a German residency card. He needed no visa at that point.

“When we understudied the case, we realized that the Nigerian government had not filed a case for extradition. They only claimed that he is wanted in Nigeria for criminal offenses. Our argument is that he was arrested because of Nigeria’s request, and there is no proof to show that he is a criminal.”

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