APA – Lagos (Nigeria)
The report that the Budget Office of the Federation has said Nigeria now has a “limited borrowing space” due to its poor debt-to-revenue ratio, stressing that “trouble” looms for the country if it exceeds its limits is one of the trending stories in Nigerian newspapers on Thursday.
The Punch reports that Budget Office of the Federation has said Nigeria now has a “limited borrowing space” due to its poor debt-to-revenue ratio, stressing that “trouble” looms for the country if it exceeds its limits.
The Director-General of the Budget Office, Ben Akabueze, while addressing members-elect of the 10th National Assembly at their week-long induction ceremony in Abuja on Wednesday, pointed out that while Nigeria remains healthy with its debt-to-GDP ratio, the country is not with its debt-to-revenue ratio.
Akabueze was speaking to the newly elected and returning members of the National Assembly, which is responsible for the consideration, amendment and passage of annual budgets of the Federal Government as well as economic bills like the Finance Bill.
He said, “You may have heard that we have one of the lowest Gross Domestic Products-to-debt ratios in the world. While the size of the FG budget for 2023 created some excitement, the aggregate budget of all the governments in the country amount to about N30tn. That is less than 15 per cent in terms of ratio to GDP.
“Even on the African continent, the ratio of spending is about 20 per cent. South Africa is about 30 per cent; Morocco is about 40 per cent. And at 15 per cent, that is too small for our needs. That is why there is fierce competition for the limited resources.
“That can determine how much we can relatively borrow. We now have very limited borrowing space; not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio. Once a country’s debt service ratio exceeds 30 per cent, that country is in trouble and we are pushing towards 100 per cent, and that tells you how much trouble we are in.
The newspaper says that Nigeria’s oil production is currently lower than its technical allowable capacity by about one million barrels per day, the Federal Government announced on Wednesday.
It attributed the low oil output to challenges such as lack of investments, insecurity, and reduction in hydrocarbon funding arising from energy transition, among others.
The government disclosed this through the Nigerian Upstream Petroleum Regulatory Commission at the host communities sensitisation workshop with the theme, “The Implementation of The Host Communities Development Trust,” held in Abuja.
“While the commission is prioritising efforts towards increasing oil and gas production and ensuring maximum federation revenue through the optimisation of oil and gas value chain, the efforts have been constrained by a myriad of challenges.
“These challenges range from insecurity, low investment, and de-prioritisation of funding of hydrocarbon development arising from the energy transition. Currently, Nigeria has the technical allowable capacity to produce about 2.5 million barrels of oil per day. However, arising from the highlighted challenges, our current production hovers around 1.5 million barrels of oil and condensate per day,” the Chief Executive, NUPRC, Gbenga Komolafe, stated.
Komolafe, who was represented by the the Commissioner, Economy, Regulatory and Strategic Planning, NUPRC, Kelechi Ofoegbu, said the workshop would create awareness and provide a platform for knowledge sharing on the implementation of the host community provisions in the Petroleum Industry Act 2021.
He said the implementation of the provisions would be in a manner that would impact positively on the people of the Niger Delta and other oil and gas host communities.
“Our objective in this workshop is to create further awareness on this very important piece of legislation and provide updates on the commission’s activities geared towards the implementation of the regulations for Nigeria oil and gas industry.
“It is to provide a clear roadmap for the implementation of the Host Communities Development Trust to enhance peaceful and harmonious co-existence between oil and gas industry operators and host communities, and ultimately support the development of host communities,” the NUPRC boss stated.
The Guardian reports that President Muhammadu Buhari has asked the Senate to approve a fresh loan request of $800 million from the World Bank, despite the public outcry that has greeted the move.
The World Bank facility, government said, is aimed at providing succour to the poorest of the poor upon removal of the petrol subsidy that is slated to come into force two days after Buhari’s exit.
The Guardian had reported that the facility approved sometime last year was secured with the country’s special drawing right (SDR) with the International Monetary Fund (IMF) and that its payment would extend to 2051.
About $53 million out of the $800 million will be spent on hiring staffers, office administration, committee overheads and sundry matters relating to the fund administration and disbursement.
President of PENGASSAN, Festus Osifo, had urged the Federal Government to allow the next administration to decide on the loan.
But Buhari, in a letter read by Senate President Ahmad Lawan, at the commencement of a plenary session yesterday, ignored the advice, requesting the Senate to approve the facility, which he said, would be utilised to scale up the National Social Safety Net Programme.
The request came as the Director General of the Budget Office of the Federation, Dr. Ben Akabueze, criticised the continuous accumulation of public debt, saying the lean revenue does not support the move.
The newspaper says that the Federal Executive Council (FEC) meeting presided over by Vice President Yemi Osinbajo on Wednesday adopted a new national automotive policy that would span through 2023 to 2033.
Minister of Trade and Investment, Niyi Adebayo, explained that the new policy would explore how the automotive industry can migrate seamlessly from combustible engines into electric solar-powered engines.
This was also in addition to FEC’s approval for the implementation of the first ever Nigeria investment policy 2023 to 2027.
Adebayo explained that the concept was for the country to develop rapidly through industrialization, then snowball into a sustainable investment climate to attract the kind of investment we desire.
Briefing newsmen, he said, “We felt that there was a need for us to have an investment quality, which would give confidence and allow people who want to better the country, that confidence to bring their funds into the country, the result of which we put this policy together.
“Second memo, which we presented was for the approval of the Nigeria automotive industry development plan 2023 to 2033. This is an improvement on the 2013 automotive industry development plan, which was in place before.
“The whole idea is to bring it up to date with current realities. Also, to put our auto industry on the proper footing, I don’t know if you are aware that we have capacity today to assemble 400,000 vehicles.
“One thing that happens to the auto industry is that when the assembly or companies move into a country to make that investment, which can be anything between $300 to $400 million for the assembly plant. What happens is that the makers of the components that go into the manufacture of these vehicles also move to that country to set up competent baking factories”.
Adebayo also disclosed that the third paper presented to Council was for the approval for trade policy of Nigeria for to 2023 to 2027.
GIK/APA