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 Senate approves MTEF as oil prices, Naira crash further

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PostSubject: Senate approves MTEF as oil prices, Naira crash further   2015-12-17, 10:03

ABUJA — The Senate, yesterday, approved the Medium Term Expenditure
Framework, MTEF, and Fiscal Strategy Paper, FSP, 2016-18 submitted by the
Federal Government, basing the financial estimates on oil revenue at benchmark
of $38 per barrel and exchange rate at N197/ $1. MTEF and FSP are the three-
year fiscal plan from where the annual budget is extracted.
But the international oil prices and the domestic currency market at the parallel
segment have all moved against both benchmarks, yesterday.
While the global oil benchmark, West Texas Intermediate and Brent Crude
closed, yesterday, at $35.83 per barrel, down by 4.07 per cent and Brent Crude
down by 3.25 per cent to $37.20 per barrel, the OPEC reference where Nigeria’s
Bonny Light trades also closed lower at $32.6 per barrel, far below the Federal
Government’s 2016 budget benchmark.
Similarly, while the official exchange rate has been retained by the Central Bank
of Nigeria, CBN, at N197/ $1, the Naira crashed to N270 per dollar at the
parallel market, yesterday.
Market operators blamed the continued crash in Naira value at the parallel
market on constrains in the supply of the foreign exchange resources coupled
with speculations that official devaluation is becoming inevitable following
steady decline in foreign reserves and dollar inflow from crude oil sales.
The speculations appeared further fuelled by CBN’s reduction of quantity of
foreign exchange supply to Bureaux de Change, BDCs, yesterday to $10,000,
down by over 66 per cent from $30,000 per week.
At the backdrop of these developments, President Muhammadu Buhari is
expected to present the 2016 budget estimates to the National Assembly on
Tuesday for further deliberations and final approval of the 2016 Appropriation
Single salary account for all employees
Meanwhile, the Senate also approved, yesterday, that the Federal Government
should, in 2016, establish a data base and possibly a single salary account for
all its employees to help streamline and reduce its personnel cost.
The Senate also urged the government to sustain the implementation of
Treasury Single Account, TSA, in 2016 with e- collection platform.
President Buhari had, Wednesday, December 8, forwarded the MTEF and FSP to
the National Assembly with far reaching economic proposals including scraping
of oil sector subsidy.
President Buhari wrote the National Assembly yesterday, informing it of his
readiness to present the 2016 Appropriation Bill to the joint session of the
Senate and House of Representatives on Tuesday.
Senate President, Bukola Saraki, who read Buhari’s letter at plenary, said the
President had requested to address the joint session of the federal parliament
on the 2016 budget at exactly 10:00 am.
The approval of the MTEF and FSP documents were sequel to a report by the
Joint Committee on Finance, Appropriations; and National Planning and
Economic Affairs by the Chairman, Senator John Owan Enoh.
In the approved MTEF report, the Senate also asked the Federal Government to
sustain the current tempo towards increasing Federal Government internally
generated revenue and diversification of the economy, as well as the projected
increase in oil production from current 1.9 million barrels per day, mbpd, to 2.2
Other recommendations of the joint committee as approved by the Senate were:
“that the relevant committees of the National Assembly should closely and
constantly maintain oversight over the ministries, departments and agencies,
MDAs, responsible for implementing special intervention programmes to ensure
that the targeted benefits are achieved while safeguarding against abuses.
“The diversification of the economy should be accompanied with economic
modernisation such that the economy can be more competitive and productive;
arrears of 2015 fuel subsidy for domestic consumption as proposed in the MTEF
be sustained;the funding of the infrastructural development stated in the MTEF
should be clearly captured in the details of the 2016 Appropriation Bill;
“The National Assembly in close collaboration with the executive should as a
matter of urgency consider an accelerated passage of the Petroleum Industry
Bill (PIB) particularly those sections with implication on joint venture funding by
the federal government (JV Cash Calls).”
In his remarks, Senate President, Bukola Saraki who noted that the contents of
the MTEF document had clearly indicated that Nigerians were going to a very
challenging times in 2016 because the nation was still practicing a mono
economy with a product that we do not control the price, stated: “We must
continue to increase our independent revenue, we must make effort to increase
our tax revenue and the committees should intensity efforts in their oversight
“We must also work to reduce the level of borrowing and the executive should
also comply with the senate recommendations on the MTEF particularly as
regards to oil subsidy. The situations in the past where we submit MTEF and
we then go to do something completely different I think should not be
entertained again.”
Naira depreciates to N270/$ in parallel market
Vanguard investigation revealed that from N260 per dollar at the close of
business on Tuesday, the parallel market exchange rate rose sharply to N270
per dollar in Lagos, indicating N10 depreciation.
But in Abuja, the parallel market exchange rate rose from N262 per dollar to
close at N273 per dollar, indicating N11 depreciation.
BDC operators, who confirmed this development to Vanguard, said the sharp
depreciation was due to further reduction in the weekly dollar sales by the CBN.
President, Association of Bureaux de Change Operators of Nigeria (ABCON),
Alhaji Aminu Gwadabe, told Vanguard that though the CBN increased the
number of BDCs it sold dollars to from 1,170 last week to 2,270 this week, it
however reduced the amount of dollars sold to each BDC by 60 per cent from
$30,000 to $10,000.
According to Mr. Harrison Owoh, Chief Executive Officer, H.J Trust BDC, the
decision of the CBN aggravated the demand situation in the market.
He said: “There is huge volume of unsatisfied demand in the market. We had to
turn down lots of request for dollars because there is no dollars to sell to
them,” he told Vanguard.
An Abuja-based BDC operator, who spoke on condition of anonymity told
Vanguard: “The dollar is selling at N273 in Abuja this evening. It was N262 in
the morning. We are surprised at the pace of depreciation, because we can’t
explain why it just went up by such margin in one day.”
Speculative reaction
On this development, Director, Corporate Communications, Central Bank of
Nigeria (CBN), Ibrahim Mu’azu, said the reduction in dollar sales to BDCs is
part of the demand management of the CBN in the foreign exchange market.
He said the depreciation of the naira to N270 per dollar is a speculative
reaction to the development.
According to him, “the rate is not sustainable. This is because there are still
other windows for end users to buy dollars at lower rate. They can buy dollars
at the official rate from the deposit money banks, and from Travelex inside the
airport. So by the time people know about these alternatives, the reaction in the
parallel market, and the exchange rate will calm down.”
Further investigations reveal that the naira also depreciated heavily against the
British pounds. From N365 per pounds at the close of business last week, the
parallel market exchange rate rose sharply to N385 per pounds at the close of
business yesterday.
In addition to the reduction in dollar sales by CBN, foreign exchange supply
from autonomous sources is thinning due to hording. “People are hording their
dollars in anticipation of further depreciation of the naira, while some are
demanding higher exchange rate before they sell,” said the Abuja-based BDC
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PostSubject: Re: Senate approves MTEF as oil prices, Naira crash further   2015-12-17, 10:46

Let approved what we make peoples hv better life jor
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PostSubject: Re: Senate approves MTEF as oil prices, Naira crash further   2015-12-17, 18:39

It is good to be good
anyhow let nija be in other
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