NEC orders review of exchange rate policy
By Taiye Odewale,
Abuja
Nigeria’s total debt profile, put at N2.03trillion ($10.32billion) as at June 2015, one month after the present administration assumed office, has now risen to N17.36trillion or $57.39billion by December 31, 2016.
This formed part of the disclosures made yesterday, by the Director-General, Debt Management Office (DMO), Dr Abraham Nwankwo, of about 500% increase in total budget profile of the country during the period under review.
He spoke at the budget defence session before the Senate Committee on Foreign and Local Debts.
This was even as the committee slammed him for kicking against the idea of the federal government begging for debt relief from her creditors, as done in 2006 under former President Olusegun Obasanjo’s administration.
According to the DMO boss, the total debt profile of the country, comprising of both local and foreign debts, had been on the increase since July 2015 owing to the prevailing economic challenges both the federal and state governments face.
For example, he said, while the federal government’s domestic debt stock as at December 31, 2015 stood at N8.84trillion, it rose to N11.06trillion as at December 2016.
He further explained that the total debt profile of $57.39billion is made up of external debt stock of $11.41billion (N3.48trillion and domestic debt stock of $45.98billion (N13.88trillion).
Out of this, he noted, the 36 states of the federation and the Federal Capital Territory accounted for about 32.45%, with the balance of 67.55% accruing to the federal government.
Worried by the rising debt profile, the committee Chairman, Senator Shehu Sani (APC Kaduna Central) and other members, asked the DMO DG why the federal government had not sought for debt relief from the creditors.
But the DG in his response, incurred the wrath of the committee members by declaring that Nigeria, despite the high debt profile, is still strong economically.
He said: “In our humble view, Nigeria is not in a position to beg for debt forgiveness. Nigeria is still a very strong economy. We have some challenges; some of them if I can try and some of them relatively strong. But, Nigeria has not reached a stage that it needs to beg for debt forgiveness. We are not in that position, sir.”
His response prompted a committee member, Senator Obinna Ogba, to fire back at him, asking whether Nigeria was in bad situation when the Obasanjo-led administration sought for debt cancellation, which he parried by saying the question was too big for him to answer.
Angered by Nwankwo’s response, Senator Sani accused him of being careless and insensitive to the plights of ordinary Nigerians with his stance on debt relief.
Sani said: “”It is shocking that in 2006, people found it easier to feed their families and pay the fees of their children and rents. Now, things are in a very bad shape. But you’re speaking not typical of somebody who lives with the people, but like somebody who is speaking from an ‘expert’s’ point of view.
“You said we are not in a bad position to ask for debt forgiveness. If you are talking from the point of how our people’s lives nowadays, you would not be able to say such things. But you are speaking naturally as an expert. The question we are putting to you is that, when we went round the world seeking for debt forgiveness, were we in a situation that was worse than this?”
But in his response, Nwankwo insisted that the questions asked “are bigger than public debt management.”
He explained that he had made a recommendation on how the economy could be turned around by raising the infrastructure deficit.
“Beyond that, I don’t think I have the mandate and I don’t want to presume that I have the capability to come here and pontificate on how all the problems of Nigeria can be resolved because that is not my mandate. And I will be very presumptuous to be saying that,” he said.
CBN on Forex
In a related development, the National Economic Council (NEC), has expressed concern over the poor value of the country’s currency, and called on the Central Bank of Nigeria (CBN) to urgently review the current Forex Policy.
The council also approved the injection of $250 million into the Sovereign Wealth Fund (SWF) to be sourced from the Excess Crude Account (ECA).
Briefing State House correspondents after the NEC meeting in Abuja, Deputy Governor of Nasarawa state, Mr. Silas Ali Agara, said CBN Governor, Mr. Godwin Emefiele assured the council that the situation was being managed.
“After a brief presentation on Forex Policy options by the CBN Governor, council members generally expressed concern over the current situation of the exchange rate and called for an urgent review of the current Forex Policy, especially the gap between interbank and the parallel market rates.
The CBN Governor sued for patience and understanding, assuring that the situation is being closely managed,” he said.
Also speaking, Minister of Finance, Mrs. Kemi Adeosun, said the council was informed that the NSWF has the highest ranking in Africa in terms of performance and capitalisation.
“Council, while adopting the report of the NSIA, decided to inject a fresh $250 million into the SWF sourced from the Excess Crude Account,” she said.
She said the report highlights included the financial performance 2014 to Q3 2016; update and investment strategy on the NSIA Future Generation Fund; NSIA infrastructure strategy and Agriculture Fund; and NSIA – Old Mutual Real Estate Co-Investment Vehicle, among others.
The minister further explained that the balance of ECA as reported to the
council, stands at $2.45 billion as at February 15, 2017.
Adeosun also disclosed that the council was briefed on the appointment of
eight accounting firms to start verification process of the monthly Budget Support Loan Facility based on the approved Fiscal Sustainability Plan by the states.
She said the Minister of Budget and National Planning, Senator Udoma Udo Udoma, assured the council that the federal government has a recovery plan that would take the country out of the woods.
“Consultations on the plan are ongoing to firm-up the plan with clear roles for all the stakeholders and the states. He told the council that the plan addresses agriculture and food security; energy sufficiency-power and petroleum availability; improving transportation infrastructure; industrialisation, SMEs, and manufacturing as well as a stabilisation of the macro-economic environment,” she said.
The minister also said nominations have been made by the government into the board of the Nigeria Sovereign Investment Authority.
She listed the nominees as Mrs. Halima Buba from North-east, Mr. Bello Maccido from North-west, Ms. Lois Laraba Machunga-Disu from North-central, Mr. Babajide Zetilin from South-west, Mr. Urum Kalu Eze from South-east and Mr. Abue Ighodalo from South-south as non-executive directors.
She said council has unanimously adopted the nominations for onward consideration of President Muhammadu Buhari for approval.
The minister also told journalists that the Managing Director/Chief Executive Officer of the National Sovereign Investment Authority (NSIA), Mr. Uche Orji, presented to the council its annual reports and accounts for the year ended 2015 and update on 2016 activities.
