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CBN warn FG against accumulating debts

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CBN warn FG against accumulating debts

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Friday warned the Federal Government against using debt-to-gross domestic product (GDP) ratio as a reason for accumulating debts.

During its 271st meeting in Abuja, the Committee raised alarm over rising public debts, which it noted, were growing faster than both domestic and external revenues.

In the communique read by the CBN governor, Godwin Emefiele, at the end of the two-day meeting, the Committee asked the Federal Government to consider building buffers against the growing impact of the country’s high debt profile.

Buffers

One of the key buffers was the resolve not to be sharing among the three tiers of government all the proceeds from the Federation Account at the monthly Federation Accounts Allocation Committee (FAAC) meetings.

Such a caution by the Fiscal Authorities, the MPC said, would help avert a macro-economic downturn, in the event of an oil price shock at the international market.

Besides, the committee urged the government to gradually reduce reliance on oil receipts and focus on revenue diversification through reforms of the tax system.

The Committee also called on the government to rationalise fiscal expenditure towards reducing the current excessively high cost of governance.

‘No cause for alarm’

Meanwhile, the latest report by the Debt Management Office (DMO) on Nigeria’s total public debt shows a rise by about 2 percent to N26.22 trillion in the last quarter of last year, from N25.7 trillion recorded between July and September 2019.

The Director-General of the DMO, Patience Oniha, said despite the marginal increase in the public debt level, the country was still within the acceptable debt sustainability threshold.

The 2017 Annual National Debt Sustainability Analysis Report showed Nigeria’s total public debt-to-GDP ratio was still below the 56 percent threshold.

The debt-to-GDP ratio is the metric comparison of a country’s public debt (what a country owes) to its (GDP (aggregate value of goods and services produced in the economy over a particular period).

Often calculated as a percentage, the ratio of total GDP divided by total debt portfolio can also be interpreted as the number of years the country requires to pay back its debt if GDP is dedicated entirely to debt repayment.

Criticisms

But, the MPC advised the government against the practice of interpreting the favourable debt-to-GDP ratio in a way to justify continued borrowing from domestic and foreign sources and accumulating more debts.

Government critics say continued borrowing to finance government business amounts to inadvertently mortgaging the future of generations of Nigerians who would be saddled with the burden of servicing such debts for several years.

Noting the continued rise in headline inflation (year-on-year) to 11.98 percent in December 2019, from 11.85 percent in the previous month, the Committee said this was attributable to an increase in both the food and ‘core’ components.

The two components rose by 14.67 and 9.33 percent in December 2019, from 14.48 and 8.99 percent respectively in November.

Apart from addressing the monetary factors, the Committee said the opportunity for further monetary policy measures has become constrained.

Observing that inflation rate above 12 percent would hurt the economy, the Committee called on the fiscal authorities to speedily address legacy structural impediments giving rise to upward-trending price developments in the economy.

It identified these structural impediments to include the infrastructure deficit and the long-standing clashes between herdsmen and farmers, which have constrained domestic production, resulting in a significant rise in food inflation.

“The Federal Government must relentlessly seek innovative ways of addressing security challenges across the country in order to boost aggregate food supply,” the MPC said.

-PremiumTimes

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Crime

Oil Theft: EFCC to Train Army in Evidence Handling

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In a bid to enhance the prosecution of suspects arrested for involvement in illegal oil bunkering in the Niger Delta, the Economic and Financial Crimes Commission, EFCC has offered to train officers of the 6 Division, Nigerian Army in the intricate art of evidence gathering and handling to guarantee successful prosecutions in court.

Usman Iman, Zonal Head of the Port Harcourt office of the EFCC made the offer today, January 23, 2020, when he led senior officers of the Commission on a courtesy visit to the General Officer Commanding, 6 Division Nigerian Army, Major General F. O. Agugo.

According to him, the training will ensure “that evidence is secured to enhance prosecutions as lawyers often look for loopholes to frustrate the trial of oil theft cases.”

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Crime

EFCC Arraigns Adoke Over Malabu Oil Scam

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The Economic and Financial Crimes Commission, EFCC on January 23, 2020, arraigned Muhammed Bello Adoke, before Justice A.I. Kutigi of Federal Capital Territory High Court, Abuja.

Adoke, a former attorney-general of the federation and minister of Justice is facing an amended 42-count charge. He is being tried alongside Aliyu Abubakar, Mr. Rasky Gbinigie, Malabu Oil and Gas Ltd, Nigeria Agip Exploration, Shell Nigeria Ultra Deep Ltd and Shell Nigeria Exploration Production.

Adoke is accused of using public office for gratification, an offence contrary to and punishable under Section 115(a) of the Panel Code, Cap. 532 Laws of the Federation of Nigeria (Abuja)1990 and punishable under Section 115(i) of the same Penal Code.

Count one of the charges reads: “That you, Muhammed Bello Adoke, while being a public servant, as attorney-general and minister of Justice of the federation, sometime in August 2013, within the jurisdiction of this honourable court, accepted from Aliyu Abubakar for yourself a gratification of US dollars equivalent of N300,000,000.00 (Three Hundred Million Naira) only other than lawful remuneration, as a motive for facilitating and negotiating the Block 245 Resolution Agreement with Shell Nigeria Ultra Deep Limited, Nigeria Agip Exploration Limited, and Shell Nigeria Exploration and Production Company Limited, and thereby committed an offence contrary to and punishable under Section 115(a) of the Penal Code, Cap. 532 Laws of the Federation of Nigeria (Abuja)1990 and punishable under Section 115(i) of the same Penal Code.”

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Economy

CBN appoints Directors

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The Management of the Central Bank of Nigeria (CBN) has announced the appointment and redeployment of some Directors in the apex bank.

A statement from the CBN on Thursday said Mr. Yusuf Philip Yila, a Director with the bank and the Managing Director, NIRSAL Microfinance Bank (NMFB), has been redeployed to the position of Director, Development Finance Department, with effect from Friday, January 24, 2020.

Yila succeeds Dr. Mudashiru Olaitan who retires from the bank on January 26, 2020, having reached the statutory retirement age.

Other movements announced by the management include the redeployment of Mr. Kofo Salam-Alada from the Consumer Protection Department to the Legal Services Department as well as the movement of Mr. Samuel Okojere from the Payment System Management to the Banking Services Department, to replace Mr. Dipo Fatokun, who retired from the services of the Bank in December 2019.

The CBN Management also approved the appointment of Mr. Clement Buari as Director, Strategy Management Department; Haruna Mustafa, Director, Consumer Protection; Bello Hassan, Director, Other Financial Institutions’ Supervision Department; Dr. Ozoemena Nnaji, Director, Trade and Exchange Department; and Mr. Musa Itopa Jimoh as Director, Payment System Management. Meanwhile, Mr. Abubakar Abdullahi Kure, has also been appointed Director and Acting Managing Director of the NIRSAL Microfinance Bank.

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