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World Bank projects 5.6% growth for global economy

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The global economy is expected to grow at 5.6 per cent in 2021, although many emerging market and developing economies continue to struggle with the COVID-19 pandemic and its aftermath.

The World Bank said this in its June Global Economic Prospects released on Tuesday in Washington D.C., adding that the expected growth was based largely on strong rebounds from a few major economies.

The 5.6 per cent expected growth, the fastest post-recession pace in 80 years, is an upward review from the 4.1 per cent forecast in January.

According to the bank, in spite of the recovery, global output will be about two per cent below pre-pandemic projections by the end of the year.

Also, per capita income losses would not be unwound by 2022 for about two-thirds of emerging market and developing economies.

It said that among low-income economies, where vaccination had lagged, the effects of the pandemic had reversed poverty reduction gains and aggravated insecurity and other long-standing challenges.

Among major economies, the United States of America’s growth is projected to reach 6.8 per cent, reflecting large-scale fiscal support and the easing of pandemic restrictions, while growth in other advanced economies is also firming, but to a lesser extent.

“Among emerging markets and developing economies, China is anticipated to rebound to 8.5 per cent this year, reflecting the release of pent-up demand.

“Emerging market and developing economies as a group are forecast to expand by six per cent this year, supported by higher demand and elevated commodity prices.”

It however, said that the recovery in many countries was being held back by a resurgence of COVID-19 cases and lagging vaccination progress, as well as the withdrawal of policy support in some instances.

It said that excluding China, the rebound in this group of countries was anticipated to be a more modest 4.4 per cent, while the recovery among emerging market and developing economies was forecast to moderate to 4.7 per cent in 2022.

Even so, gains in this group of economies are not sufficient to recoup losses experienced during the 2020 recession, and output in 2022 was expected to be 4.1 per cent below pre-pandemic projections,” it said.

It added that per capita income in many emerging market and developing economies was also expected to remain below pre-pandemic levels and losses were anticipated to worsen deprivations associated with health, education and living standards.

Major drivers of growth had been expected to lose momentum even before the COVID-19 crisis, and the trend is likely to be amplified by the scarring effects of the pandemic.

“Growth in low-income economies this year is anticipated to be the slowest in the past 20 years other than 2020, partly reflecting the very slow pace of vaccination.

“Low-income economies are forecast to expand by 2.9 per cent in 2021 before picking up to 4.7 per cent in 2022.

“The group’s output level in 2022 is projected to be 4.9 per cent lower than pre-pandemic projections.”

For Sub-Saharan Africa, regional activity is expected to expand a modest 2.8 per cent in 2021 and 3.3 per cent in 2022.

According to the report, positive spillovers from strengthening global activity, better international control of COVID-19 and strong domestic activity in agricultural commodity exporters are expected to gradually help lift growth.

“Nonetheless, the recovery is envisioned to remain fragile, given the legacies of the pandemic and the slow pace of vaccinations in the region.

“In a region where tens of millions more people are estimated to have slipped into extreme poverty because of COVID-19.

“Per capita income growth is set to remain feeble, averaging 0.4 per cent a year in 2021-22, reversing only a small part of last year’s loss.

“Risks to the outlook are tilted to the downside, and include lingering procurement and logistical impediments to vaccinations, further increases in food prices that could worsen food insecurity, rising internal tensions and conflicts, and deeper-than expected long-term damage from the pandemic.”

In Nigeria, however, growth is projected to resume at a modest rate of 1.8 per cent in 2021 and edge up to 2.1 per cent in 2022, assuming higher oil prices, a gradual implementation of structural reforms in the oil sector and a market-based flexible exchange rate management.

“The expected pickup is also predicated on continued vaccinations in the second half of 2021 and a gradual relaxation of COVID-related restrictions that will allow activity to improve.

“Nonetheless, output in Nigeria is not expected to return to its 2019 level until end-2022.”

David Malpass, the World Bank Group President, said that while there were welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.

He said that globally coordinated efforts were essential to accelerate vaccine distribution and debt relief, particularly for low-income countries.

“As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability.”

The report said that lowering trade costs such as cumbersome logistics and border procedures could help bolster the recovery among emerging market and developing economies by facilitating trade.

Indermit Gill, World Bank Group Vice President for Equitable Growth and Financial Institutions, said that linkages through trade and global value chains had been a vital engine of economic advancement for developing economies and lifted many people out of poverty.

He said that however, at current trends, global trade growth was set to slow down over the next decade.

“As developing economies recover from the COVID-19 pandemic, cutting trade costs can create an environment conducive to re-engaging in global supply chains and reigniting trade growth.”

It also said that rising food prices and accelerating aggregate inflation may also compound challenges associated with food insecurity in low-income countries.

However, policymakers in these countries should ensure that rising inflation rates do not lead to a de-anchoring of inflation expectations and resist subsidies or price controls to avoid putting upward pressure on global food prices.

Instead, policies focusing on scaling up social safety net programs, improving logistics and climate resilience of local food supply would be more helpful, it added. (NAN)

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Senate Passes MTEF/ FSP, To Probe N8.4tn Withheld Subsidy Funds By NNPCL

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The Senate has passed the 2024 – 2026 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) for implementation by the Federal Government.

The passage followed the presentation of a report by the chairman of the Joint Committees on Finance and National Planning & Economic Affairs presented by Sen. Musa, Mohammed Sani (Niger East).

The senate also tasked its Committees on Finance and Petroleum as well as Gas to investigate allegations of withheld funds by the NNPC, including NGN 8.48 trillion in petrol subsidies, and $2 billion (NGN 3.6 trillion) in unpaid taxes.

The allegation was highlighted by reports from the Nigeria Extractive Industries Transparency Initiative (NEITI) and the Revenue Mobilization, Allocation, and Fiscal Responsibility Commission.

The development comes following the Office of the Auditor-General of the Federation, saying it had received the necessary and complete documents required to verify the N2.7 trillion fuel subsidy claim by the Nigerian National Petroleum Company Limited against the government.

The Senate approved the exchange rate projection of 1,400 USD for 2025-2027 with a provision for review in early 2025, based on prevailing monetary and fiscal policies.

They also resolved that any excess on the official figure would be used for debt servicing.

During the debate on the report submitted by the Chairman Senate Committee on Appropriations, Senator Sani Musa (APC, Nigeria East ), the Lawmakers also demanded a reduction in the petrol prices against the backdrop of the commencement of the Port Harcourt Refinery.

Chairman of the Senate Committee on Appropriations, Senator Adeola Olamilekan referenced the Federal Government’s Compressed Natural Gas initiative as the underlying imperative for the adoption of the N1400 to one dollar.

According to him: “With the functioning of our refineries the demand for Forex will drop. With the CNG initiative, Nigerians will have an option for your information if you leave Benin to Lagos the amount of fuel is about 130 thousand but with CNG you can’t use more than 48 thousand Naira. Another issue to be addressed is the recurrent to-capital ratio which is very high.

The need to support the manufacturing industries was also raised by Senator Yahaya Abdullahi, of the Peoples Democratic Party, Kebbi North if the projections of the MTEF are to be achieved.

In their resolutions, the Senate also adopted inflation rate projections of 15.75, 14.21 and 10.04 per cent for 2025, 2026 and 2017 respectively.

According to the recommendations, “The 2025 Federal Government of Nigeria budget proposed spending of N47.9trilion of which N34.82 trillion is retained. New borrowings stood at N9.22tn, made up of both domestic and foreign borrowings.

Capital expenditure is projected at 16.48 trillion naira with statutory transfers standing at 4.26 trillion naira and sinking funds projected at N430.27billion.

 

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Tinubu Writes NASS, Seeks Approval For N1.77tn Fresh External Borrowing

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President Bola Ahmed Tinubu
President Bola Ahmed Tinubu
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President Bola Tinubu has written to the National Assembly, seeking approval of a fresh N1.767 trillion, the equivalent of $2.209 billion as a new external borrowing plan in the 2024 appropriation act.

If approved, the loan will be used to part-finance the deficit of N9.7tn for the 2024 budget.

The president’s request was read by the speaker during plenary on Tuesday.

The president has also forwarded the MTEF/ FSP 2025- 2027 to parliament and the National Social Investment Programme establishment amendment bill, to make the social register the primary tool for the implementation of the federal government’s social welfare programmes.

This is as the Central Bank of Nigeria recently said the Federal Government spent $3.58 billion servicing the country’s foreign debt in the first nine months of 2024.

Data sourced from the Central Bank of Nigeria (CBN) report on international payment statistics showed that the amount represents a 39.77 per cent increase from the $2.56bn spent during the same period in 2023.

According to the report, while the highest monthly debt servicing payment in 2024 occurred in May, amounting to $854.37m, the highest monthly expenditure in 2023 was $641.70m, recorded in July.

The trend in international debt servicing by the CBN highlights the rising cost of debt obligations by Nigeria.

Further breakdown of international debt figures showed that in January 2024, debt servicing costs surged by 398.89 per cent, rising to $560.52m from $112.35m in January 2023. February, however, saw a slight decline of 1.84 per cent, with payments reducing from $288.54m in 2023 to $283.22m in 2024.

March recorded a 31.04 per cent drop in payments, falling to $276.17m from $400.47m in the same period last year. April saw a significant rise of 131.77 per cent, with $215.20m paid in 2024 compared to $92.85m in 2023.

The highest debt servicing payment occurred in May 2024, when $854.37m was spent, reflecting a 286.52 per cent increase compared to $221.05m in May 2023. June, on the other hand, saw a 6.51 per cent decline, with $50.82m paid in 2024, down from $54.36m in 2023.

July 2024 recorded a 15.48 per cent reduction, with payments dropping to $542.50m from $641.70m in July 2023. In August, there was another decline of 9.69 per cent, as $279.95m was paid compared to $309.96m in 2023. However, September 2024 saw a 17.49 per cent increase, with payments rising to $515.81m from $439.06m in the same month last year.

Given rising exchange rates, the data raises concerns about the growing pressure of Nigeria’s foreign debt obligations.

The total debts of the 36 states in Nigeria rose to N11.47tn as of June 30, 2024, despite allocations by the Federal Accounts Allocation Committee (FAAC), and their respective internally generated revenues (IGR).

An analysis of data from the public debt reports released by the Debt Management Office (DMO) said the rise was 14.57 per cent higher than the N10.01tn recorded in December 2023.

External debt for the states and the Federal Capital Territory also climbed from $4.61bn to $4.89bn within the period under review.

In naira terms, the debts increased by 73.46 per cent, from N4.15tn to N7.2tn, following the devaluation of the naira from N899.39/$1 in December 2023 to N1,470.19/$1 by June 2024.

 

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Protests In Abuja Demanding Investigation Into Guaranty Trust Bank Operations

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A protest was held today at the Police Force Headquarters in Abuja, organized by the Coalition of Civil Society for Good Governance in Nigeria, calling for an urgent investigation into serious allegations against Guaranty Trust Bank Limited (GTB). The bank, under the leadership of Segun Agbaje, is facing accusations of corruption, money laundering, unsolicited account openings, and more.

The Chief Convener of the coalition, Comrade Tijani Usman addressed the crowd, highlighting the pervasive issue of corruption that has plagued Nigeria’s socio-economic landscape since 1960. He emphasized the critical role of the banking sector in economic development and criticized the lack of action from regulatory and law enforcement agencies regarding GTB’s alleged infractions.

“The allegations against GTB are serious and cannot be ignored,” Usman stated. He urged the Nigeria Police Force to prioritize these claims and conduct a thorough investigation to hold accountable those responsible for any wrongdoing.

Participants in the protest voiced their concerns about recent operational failures at GTB, particularly a prolonged outage of the bank’s payment systems, which resulted in substantial losses for customers. The coalition called for the bank’s management to focus on resolving these critical issues instead of engaging in activities that undermine trust.

The protesters also appealed to the Central Bank of Nigeria and the Economic and Financial Crimes Commission to take a proactive stance in investigating the allegations and ensuring accountability within the banking sector.

As the coalition continues its peaceful demonstrations, they remain steadfast in their commitment to advocating for justice for affected customers and investors. This protest reflects a growing demand for greater transparency and accountability in Nigeria’s banking system, as civil society seeks to foster an environment where corruption is actively challenged and addressed.

The response from authorities to this protest may significantly impact the future governance of financial institutions in Nigeria, highlighting the necessity for reform and vigilance in the fight against corruption.

 

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