4 BUSINESS DAY C002D5556 Thursday <strong>20</strong> <strong>Jul</strong>y <strong>20</strong>17 NEWS Nigeria’s suspension from EGMONT Group will hurt economy – Senate OWEDE AGBAJILEKE, Abuja Worried about the grave economic implication of Nigeria’s suspension from the EGMONT group, the Senate has taken steps to avert expulsion. The EGMONT Group is a network of national financial intelligence units and is the highest inter-governmental association of intelligence agencies in the world, with 154 member countries. It provides the backbone for monitoring international money laundering activities. Nigeria became a full member of the group in <strong>20</strong>07 during the administration of former President Olusegun Obasanjo. However, at its <strong>Jul</strong>y 7, <strong>20</strong>17 meeting in China, Nigeria’s Financial Intelligence Unit (NFIU), the agency of government that represents the country at the meetings of the group, was suspended till January <strong>20</strong>18 with a threat of an expulsion if the country does not meet the standards of the group with regard to its operations. It cited inability of the Federal Government to make the NFIU FG’s fiscal deficit jumps 101% to nine year-high of... Continued from page 1 <strong>20</strong>17 rose 8 percent to N11.9 trillion, from N11.05 trillion as at December <strong>20</strong>16, while external debt stood at $US 39 billion, according to data from the Debt Management Office (DMO). “The deficit explains why the government has been borrowing massively, stoking interest rates and crowding out the private sector,” said Johnson Chukwu, CEO of Lagos-based financial advisory firm, Cowry Assets. “The challenge of such public borrowing is that it stifles credit to the productive (private) sector and would have a negative effect on the speed at which the country can exit recession. “Revenue has tanked and the government needs to take bold measures to cut down recurrent expenditure, to engender frugal spending,” Chukwu told <strong>BusinessDay</strong>. autonomous from the EFCC, interference of the acting chairman of the anti-graft agency, Ibrahim Magu in the affairs of the NFIU and divulging confidential information concerning EGMONT Group to the media. The global body stated that if Nigeria fails to comply with the group’s demands for a legal framework granting autonomy to the NFIU by January <strong>20</strong>18, the country would be expelled from the organisation. If this happens, Nigeria will no longer be able to benefit from financial intelligence shared by the other 153 member countries, including the United States, United Kingdom, Qatar, Saudi Arabia, Germany and Italy, among others. The Senate is blaming the Ex- Continues on page 37 L-R: Saidu Mohammed, COO, Gas and Power NNPC; Chinwuba Oby Laura, regulating liaison officer, AITEO; Ibe Kachikwu, minister of state for petroleum resources; Samira Buhari, manager public sector and corporate relationship, AITEO, and Bekeme Masade, founder/CEO CSR-in-Action, during the 6th Sustainability in the Extractive Industries (SITEI) conference, theme “Building Local for Global” held in Abuja, yesterday. Pic by Tunde Adeniyi Pabina Yinkere, head of institutional business at Lagos-based investment bank, Vetiva Capital, urges the country to focus on growing its revenues. “The bulk of our revenue comes from oil, which we do not have control over (in terms of prices), for production, which we have some control on, we must ensure output is steady, or even grow it from current levels,” Yinkere said in an interview. Nigeria should also strive to raise its tax collections by enforcing better compliance, according to Yinkere. The CBN figures show that Federal Government’s retained revenue for the first quarter of <strong>20</strong>17 based on provisional data, amounted to N608.11 billion. This was below the proportionate quarterly budget estimate and the receipts in the preceding quarter by 9.9 and 31.0 percent, respectively. Of the total revenue, the Federation Account accounted for 58.6 percent, while Federal Government Independent Revenue, VAT, and others (NNPC Refund and Exchange Gain) accounted for 12.8, 10.9, 9.3, 5.3 and 3.1 per cent, respectively. At N1.67 trillion, the CBN data indicated that the Federal Government’s expenditure for the first quarter of <strong>20</strong>17 was above the provisional quarterly budget estimate and the level in the preceding quarter by 6.9 and 7.3 per cent, respectively. The development, relative to the proportionate quarterly budget estimate, was attributed to the rise in capital expenditure. A breakdown of the total expenditure, showed that the recurrent expenditure at 63.3 percent still dominated, while capital and statutory transfers accounted for 31.7 and 5.0 percent, respectively. Nigeria’s economy, which vies with South Africa’s to be the largest on the continent, shrank by 1.5 percent last year, the first contraction since 1991, after revenue from oil, its biggest export, fell by almost half. About 30 percent of the budget will be spent on roads, rail, ports and power, to help stimulate business activity. Spending on capital projects to promote exports and in the oil-producing Niger delta region, is expected in the second half of the year. “Capital projects are likely to suffer, as revenues underperform,” said Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI). Indications are that the Federal Government continues to struggle with its revenues, even beyond the first quarter. The Federal Government’s gross revenue was N458.42 billion in May, 48.8 percent short of the monthly budget estimate of N894.76 billion, according to the Central Bank of Nigeria (CBN)’s monthly report. This has been the trend New oil policy targets long term sales of petroleum products …Nigeria targets 2.5m to 3m b/d crude production in 2 years …Over 30 individuals already in line for refinery financing scheme …As FEC approves National Social Protection Policy, National Employment Policy ELIZABETH ARCHIBONG Nigeria’s Federal Executive (FEC) Council on Wednesday approved a National Oil Policy which amongst other things, targets long term sales of petroleum products, which is the main source of the country’s revenue. In implementing the policy, officials say the government will hitherto consider geographical markets in long term contracting and sales of its oil, as opposed to the currently structured contracting. “How we sell our crude is going to be looked at, there is a lot of geographical market, we need to look at long term contracting and sales, as opposed to systemic contracting Continues on page 37 throughout this year. Actual revenues have flunked government targets plagued by huge slippages in non-oil revenues and low oil prices and production to a less extent now. The country’s non-oil revenue, expected to relieve oil as the government’s dominant source of cash, came in at N1.13 trillion in the first five months of <strong>20</strong>17. That is half the size of a N2.2 trillion five-month target set by the government (federal and states) for <strong>20</strong>17. Various analysts, and more recently, the World Bank, have expressed concerns over Nigeria’s debt profile, citing the inadequacy of current revenues to sustain interest rate payments. At the recent IMF/World Bank Spring Meetings in Washington, Catherine Pattillo, Assistant Director and Head of Fiscal Policy and Surveillance Division of the IMF, pointed out that Nigeria’s interest payment to tax revenue has more than doubled to 66 percent.
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