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FG’ll pay foreign debts before other obligations – Emefiele

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EmefieleThe Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, has said the Federal Government will ensure the payment of foreign debts before settling other obligations.

Emefiele said this while answering questions during a press briefing at the ongoing International Monetary Fund/World Bank Annual Meetings in Washington DC.

He said, “We have ensured that any of our debts due is given utmost priority, particularly foreign debt.

“It is like first line charge, and the minister talks to me about it. And we ensure that wherever we are going to find the dollar, we would pay any of our debts, even before we service any obligation. That is a rule if it is Nigeria’s authentic sovereign debt.”

According to the CBN governor, when Dangote refinery begins production latest by July 2022, it will be a major foreign exchange saving source for the country.

He said the importation of petroleum products currently consumed about 30 per cent of the forex spent on imported items.

Noting the Dangote refinery’s capacity to process 650,000 barrels of crude oil daily into petroleum products, Emefiele said the country would save forex and export those refined products.

“We know that the refineries that are abroad are already scared because they know the market they will lose because we know that Nigerians will prefer to patronise that (Dangote refinery) than patronise foreign imported refined products where we will save transportation and logistics.

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Rising inflation and low economic growth in Nigeria will push a further 2.8 million people into poverty by 2023’s end, the World Bank has disclosed. This is based on a report titled, ‘Macro Poverty Outlook: Country-by-country Analysis and Projections for the Developing World,’ released recently. The Washington-based bank said, “By the end of 2023, the rise in inflation and low economic growth will have contributed to an increase of 2.8 million people in poverty (y-o-y), a 0.4 percentage points bump to 37.5 per cent of the population.” It noted that Nigeria’s high inflation reached a17 17-year high of 24.1 percent (y-o-y) in July 2023, partly reflecting surging food prices and the temporary impact of the removal of the fuel subsidy. It stated that a cumulative 725 basis points hike in the monetary policy rate since May 2022 has had little effect on reining in inflation due to clogged transmission channels, also weakened by direct credit allocation by the central bank, and the continued monetization of the fiscal deficit. The global bank further declared that federal fiscal deficit has risen to 63 per cent higher between January and May 2023 than in the same period in 2022, due to increasing interest payments, higher capital spending ahead of the elections, and the continuous large cost of the fuel subsidy. The impact of this is set to spike public debt to 45 per cent of GDP and keep debt service above total revenue in 2023. It said. “The fiscal financing need and the devaluation of the naira are expected to push the public debt to 45 per cent of GDP and keep the debt service above total revenues in 2023. “The current account balance (CAB) recorded a surplus of 2.2 per cent of GDP in Q1 2023, driven by lower imports and income outflows. However, the small CAB surpluses and capital flows since 2022 have been insufficient to increase foreign reserves, as oil export FX flows to CBN contracted, likely as a result of the direct crude sale-direct fuel purchase arrangements.” The Bretton Woods Institution further predicted that future economic growth in the country will depend on the continued implementation of macro-fiscal and inclusive structural reforms. It stated the current reforms of the government will boost economic growth to an average of 3.4 per cent in 2023-2025. It also expects inflation to begin to moderate by 2024. The World Bank added, “The share of Nigerians living below the international poverty line is expected to peak in 2024 at 38.8 per cent before beginning a gradual decline, as inflation cools down and economic growth picks up. Targeted measures, including cash transfers, could mitigate short-term adjustment costs to the poor and vulnerable and mitigate their risk of falling into intergenerational poverty traps.” Earlier in June, the bank disclosed that inflation pushed an estimated four million people into poverty between January and May 2023. Inflation has since risen to 27.33 per cent as of October 2023.

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