Managing Director and Chief Executive Officer, Financial Derivatives Company Limited, Mr Bismarck Rewane has said Nigerians should be ready for a hike in pump price of fuel products.
He argued that this was inevitable as fuel subsidies were already suffocating the government revenue.
Rewane in a presentation at the Lagos Business School which was made available to our correspondent on Tuesday, said the World Bank put Nigeria’s total subsidy bill in 2018 at N731bn, adding that “A gradual reduction in subsidy payments [is] anticipated. Only N305bn set aside for under-recovery in 2019 budget; expect an increase in the pump price of fuel.
“40 per cent shortfall in provision for subsidies (under-recoveries) points to possible price increases.”
He, however, said a petrol price hike would result in high inflationary pressure, noting that Nigeria has one of the lowest tax to Gross Domestic Product ratios at 5.3 per cent.
The financial expert pronounced the 2019 budget as counter-cyclical, saying the economy was in dire need of a boost.
He analyzed that with expenditures much higher than sustainable revenues, the fiscal the deficit had amplified by 2.15 per cent to N1.9tn, adding that the supplementary budget could only be accommodated.
“Oil revenues are projected to decline due to the impact of OPEC quota on Nigeria’s oil output level,” he added.
Speaking on the new minimum wage funding and its impact on states, Rewane explained that civil service in states accounted for about 1.9 million workers.
He said, “States get 85 per cent of Value Added Tax, as well as other statutory allocations, in addition to internally generated revenue. Personnel expenses of most states exceed IGR. So, there is either an expense problem or a revenue problem. For social reasons, headcount rationalisation may be farfetched. But labour optimisation will help boost productivity.
“IGR remains key to the funding of the new minimum wage. Funding through the statutory allocation (Federal Accounts Allocation Committee) is unsustainable.”
He noted that an increase in VAT may lead to momentary relief, accompanied by the enhanced tax administration.
Rewane also advised that other measures that will help the situation include; partially sell equity across state-owned enterprises; liberalisation – private sector-led projects; commercialisation – rental income from idle assets; and concessions – fees from long-term leasing of assets.
He explained that the change in monetary policy rate, also known as the benchmark interest rate had no impact on investment, output and savings in April.
The Monetary Policy Commission of the Central Bank of Nigeria had in March cut the MPR to 13.5 per cent from a record high of 14 per cent
“There is a possibility of another 25 basis point cut. Credit to the private sector shrank again in April,” he added.
Angola’s economy is likely to emerge from recession this year, growing at 0.3% after three years of contraction, and the debt-to-GDP ratio will fall to around 70%, Moody’s Investors Service said.
The debt burden remains vulnerable to further exchange rate depreciation given the stock of foreign-currency and foreign-currency linked debt as well as the risk of fiscal consolidation fatigue, Moody’s said in an emailed statement.
"The implementation of the IMF program and the government’s efforts to clear arrears, improve dollar liquidity and enhance budget implementation, will support Angola’s economy," Aurelien Mali, a Moody’s Vice President, said.
Reforms planned for this year, including the introduction of a value added tax to broaden the non-oil tax base, will further increase the likelihood of fiscal surpluses while oil prices remain around their current levels, Moody’s said.
President Emmerson Mnangagwa has appointed Fortune Chasi as the new Energy Minister with immediate effect.
Chasi replaces Jorum Gumbo with signs the latter was being demoted for reasons that could be linked to his continued failure to remedy the current fuel crisis across the country.
Gumbo has been appointed Presidential Affairs Minister of State in charge of Implementing and Monitoring.
He leaves the portfolio in a mess after having failed to solve the country’s worst fuel crisis in more than a decade.
During his tenure as energy minister, Gumbo often blamed the central bank for failure to avail adequate foreign currency to import the precious liquid and in some instances, blaming the fuel shortages on what he felt was panic buying of fuel by motorists.
On the other hand, Chasi leaves the Transport Ministry amid rumours he was not on talking terms with his boss Biggie Matiza.
Chasi is Zanu PF MP for Mazowe South constituency and was once justice deputy minister under former President Robert Mugabe.
Nigerian National Petroleum Corporation said that it has realized the sum of $1.6bn from some companies swindling one of its subsidiaries.
The Group Managing Director of the corporation, Dr Maikanti Baru, on Tuesday, made this known in Abuja while speaking with newsmen after a visit by officials of the Chartered Institute of Forensic and Investigative Professionals of Nigeria (CIFIPN).
CIFIPN is an anti-Fraud organisation saddled with the responsibility of providing skills to professionals from relevant fields on the use of science and technology to detect, prevent and investigate fraud and also put some measures to prevent future occurrence.
He said that its upstream subsidiary fleeced was the Nigerian Petroleum Development Company (NPDC).
Baru also said that his monitoring had made significant progress in terms of fraud detection, prevention and control. “There is a lot of sanities that has happened in the industry as a result of this. Recently, due to the work, we were able to get the Atlantic companies who were fleecing the NNPC subsidiary, the NPDC, and we got an award for them to refund 1.6 billion dollars to the NPDC, through the arbitration process.
“We have also been able to stem fraud. High profile court cases were been set up to defraud the NPDC.
“If you see the amount of money involved, if you do not have people who are determined to fight corruption, our chances would have been compromised by over 1.6 billion dollars.
“We have had cases, like NNPC versus IPCO, where they are demanding over 400 million dollars, and because of their activities, we were able to settle out of court with them for 37.5 million dollars, which is a saving of several percentages, about less than 10 per cent of the total amount.” he said.
According to Baru the recovery was possible as all staff of the corporation and its business partners had imbibed transparency in all areas of their operations.
Baru who was also conferred an award by the institute, said he would support the institute with his wealth of knowledge to help boost forensic investigation in the country.
“This institute’s intention is quite laudable and conferment of fellows on me will make me more determined to support them and being a patron will make me to share some of the knowledge I have,’’ he had said earlier.
Dr Victoria Enape, the Pro-tem President of CIFIPN, in his comment, said the institute had watched the GMD with keen interest since assumption of office.
Victoria also recognized NNPC’s partnership with Nigeria Customs Service and Department of Petroleum Resources in the fight against petroleum products smuggling in the country.
This, she said, was commendable, adding that effort to manage oil marketers and maintaining an adequate supply of products in the country had shown the high level of transparency and accountability in the operations of the corporation.
Genoa, Italy’s oldest professional football club, will be put up for sale, the Serie A outfit said in a statement on Wednesday.
Founded in 1893, the club has been owned by Enrico Preziosi, head of Italy’s largest toy manufacturer, for the last 16 years.
“Genoa Cricket and Football Club announces that a mandate had been given to Assietta S.p.A., a financial advisory firm specialised in corporate finance, as advisor for the sale of the company,” said the statement.
The announcement came with Genoa one point and one place above the Serie A relegation zone with two matches to play.
Preziosi took over in 2003 with the club in Serie B, saw them promoted four years later and has since established them as a top flight club.
However, it has been far from plain sailing and he has employed 14 coaches during his time in charge, some of them on several occasions.
He has been trying to sell the club for several years amid poor results which have sparked protests by the fans.