Connect with us

Business

IMF downgrades Nigeria’s economic growth by 0.3% for 2023, lauds Tinubu reforms

Avatar

Published

on

The International Monetary Fund (IMF) has revised Nigeria’s economic growth downward by 0.3 percent. The ‘2023 World Economic Outlook’ report, released during the annual meetings in Marrakech, Morocco, attributes this downgrade to unstable crude oil production in Nigeria.

To be more specific, the outlook now projects Nigeria’s economic growth to drop from 3.3 percent in 2022 to 2.9 percent in 2023. There is a slight rebound expected in 2024, with growth projected at 3.1 percent. The IMF based these forecasts on the negative impact of high inflation on consumption. The 2023 projection has been lowered by 0.3 percent, mainly due to weaker oil and gas production, partially because of maintenance work.

In the broader context of sub-Saharan Africa, growth is anticipated at 3.3 percent in 2023, with an acceleration to 4.0 percent in 2024. However, both years have seen slight downgrades of 0.2 and 0.1 percent, respectively, compared to earlier predictions. This trajectory falls below the historical average of 4.8 percent, and the decline is attributed to factors like adverse weather shocks, a global economic slowdown, and domestic supply challenges, particularly within the electricity sector.

Globally, the growth rate is projected to decline from 3.5 percent in 2022 to 3.0 percent in 2023 and further to 2.9 percent in 2024. Meanwhile, emerging markets and developing economies are expected to experience a relatively modest decline in growth, moving from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024.

The report emphasizes the need for collaborative efforts across various areas and urges against further fragmentation in the global economic landscape, as it can lead to costly delays. Rebuilding confidence in multilateral frameworks is seen as crucial for a system based on established rules, which promote international cooperation, worldwide prosperity, and effective governance of emerging technologies like artificial intelligence.

Advertisement

The report highlights the importance of bolstering certainty in trade policies as a key focus of necessary reforms. A stable trade policy environment is essential to provide businesses, investors, and nations with a predictable framework that supports economic growth and fosters mutually beneficial international trade relationships.

Multilateral cooperation is deemed vital to address the interconnected challenges hindering global recovery. The report suggests that all countries should aim to limit geoeconomic fragmentation and restore trust in rules-based multilateral frameworks to enhance transparency, policy certainty, and shared global prosperity. It also emphasizes the need for a robust global financial safety net with a well-resourced IMF at its core.

Regarding Nigeria, Daniel Leigh, Division Chief of the Research Department at the IMF, attributes the economic downgrade to factors like demonetization, high inflation, shocks to agriculture and hydrocarbon output. He also acknowledges important reforms initiated by President Tinubu, including ending fuel subsidies and unifying the official exchange rate, as steps toward stronger and inclusive growth.

Advertisement
Click to comment

Leave a Reply

Business

Forex crisis: Why CBN should review recapitalization requirement for BDCs – ABCON

Avatar

Published

on

The Association of Bureau De Change Operators has criticized the Central Bank of Nigeria’s new recapitalization requirements for its members amid the ongoing foreign exchange crisis.

ABCON President Aminu Gwadabe expressed this sentiment on Thursday at the 8th edition of the Vanguard Economic Summit.

This follows the CBN’s announcement of a new guideline for BDC operators in Nigeria on Wednesday.

The central bank mandated that all BDC operators reapply for licenses, raising the minimum capital requirement for tier-1 and tier-2 licenses to N2 billion and N500 million, respectively.

However, Gwadabe has urged a review of the CBN’s directive to increase the capital base for BDC operators, arguing that it deviates from global standards.

Advertisement

“You increased the capital from N10 million to N35 million in 2014, and now you are raising the capital base of BDCs from N35 million to N500 million for Tier 2 operators and N2 billion. It’s highly against the global standard,” Gwadabe said.

These developments occurred as the Naira depreciated on Thursday in both parallel and official forex markets after four days of appreciation.

Continue Reading

Business

BREAKING: CBN Upbeat, Raises Interest Benchmark To 26.25%

Avatar

Published

on

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has raised the interest rate benchmark for the third time since Olayemi Cardoso became governor, as part of an aggressive tightening cycle.

After a two-day meeting, the MPC voted to increase the Monetary Policy Rate (MPR) by 150 basis points to 26.25% from 24.75%, while keeping other policy parameters unchanged. This decision was driven by Nigeria’s persistently high headline inflation, which rose to 23.69% in April, largely due to food inflation.

Despite this, the CBN governor remains optimistic that current efforts are yielding positive results and expects further relief in the near future. Additionally, the CBN is engaging with investors to enhance the financial sector’s robustness and market transparency, which will boost investor confidence in the Nigerian market.

Continue Reading

Business

Shallow, insignificant – NLC, CSO, others knock Nigerian Govt over N18 electricity tariff reduction

Avatar

Published

on

Nigerians, the organised labour, Civil Society Organisations and power sector experts have knocked the Nigerian Federal Government and Nigerian Electricity Regulatory Commission, NERC, over the N18 downward review of electricity tariff for end-users under Band A.

DAILY POST reports that NERC announced a tariff decrease for customers under Band A feeders on Monday.

The Commission slashed electricity to N200.6 per Kilowatt-hour from N225.

Ikeja Electric, Abuja, Kaduna, Ibadan, Enugu, and other discos effected the new tariff implementation on Monday.

The development comes a month after NERC approved a 240 per cent tariff hike for electricity customers getting between 20-24 hours of supply.

Advertisement

However, Nigerians, organised labour and other organisations have kicked against the hike, insisting on its reversal amid Nigeria’s economic hardship.

Recall that on Sunday, TUC issued a two-week ultimatum to NERC to reverse April tariff hike.

But, contrary to Nigerians and Organized Labour’s demand for an immediate electricity hike reversal, NERC settled for a downward tariff review.

NERC sighted Improved macroeconomic parameters as the reason for the downward review.

The Naira appreciated N1353.21 per Dollar on Monday at the foreign exchange market, up from N1400.4 on Friday last week.

Advertisement

Explaining the decision, NERC said, “The Commission has considered changes in the macroeconomic parameters over the preceding month of April 2024 and especially the appreciation of exchange rates – consequently, the Commission has approved a downward review of end-user tariffs for Band “A” customers from NGN225/kWh to NGN206.8/kWh”.

Barr Dafe Akpeneye, Commissioner of Legal, Licensing and Compliance at NERC, stressed that, “It is based on other macroeconomic variables that the tariff was reduced”.

Meanwhile, the development did not go down well with NLC, Civil Society Organisations and many other Nigerians.

They described the reduction as silly, insignificant, tokenism, and shallow.

In an exclusive interview with DAILY POST on Monday, Benson Upah, the spokesperson of NLC, described the development as tokenism, stressing that it would not positively impact consumers.

Advertisement

He said the downward review of electricity tariff for end-users under Band A fell short of Nigerian workers’ demands and expectations.

He called for a total reversal of April’s tariff hike and a review of Nigeria’s power sector privatisation.

“This is tokenistic. It falls far below our demand or expectations. Doubtful if this will make a positive impact on consumers.

“A total reversal and a review of the privatisation of the power sector is our demand”, he told DAILY POST.

On his part, the national secretary of the Network for Electricity Consumers Advocacy of Nigeria, Uket Obonga, said NERC was confused and was making a mockery of the sector.

Advertisement

“NERC is confused. You wake up to issue electricity price hike. Is that the methodology of tariff fixing? NERC should not mock themselves.

“A methodology designed by the Commission has yet to be followed. All their claims about the benefit of electricity subsidy removal are scams,” he noted.

According to the 2023 Electricity Act, Section 116(6) provides that the proposed tariff will be published in Newspapers and the official gazette to enable stakeholders to raise concerns and representation to the Commission.

Additionally, it provides that the Commission shall issue notice to relevant stakeholders to submit their input within the timeframe determined by the Commission for consideration before the Commission updates the tariff methodology, which is why Obonga alleged that NERC failed to follow due process in issuing May’s tariff order.

Also, Ewetumo A A, a retired staff member of the defunct Power Holding Company of Nigeria, PHCN, formerly the National Electric Power Authority, NEPA, said the recent review shows how shallow and misdirected NERC personnel have become.

Advertisement

“It only shows how shallow and misdirected our bureaucrats and technocrats in NERC headquarters are.

“They refused to condemn a Gas-to-Power Policy denominated in US Dollar but are quick to pass on to hapless Nigerians the Forex fluctuations.

“NERC has no feasibility studies on Load Demand or a blueprint for building Power Plants to meet citizens’ energy needs nationwide but only to ration and price the little Megawatts remaining on the Grid”, he stated.

Similarly, the Lead Director of the Centre for Social Justice, Eze Onyekpere, said the tariff reduction is a silly manoeuvre by NERC.

He urged for a reverse to status quo before April’s tariff hike.

Advertisement

“It is a silly manoeuvre. It is above the market cost of electricity. How sustainable is the Naira appreciation?

“If the Naira slumps tomorrow, will the tariff be increased? That is why I call it a silly manoeuvre.

“They should go back to the status quo. Nigerians should know the actual cost of electricity. I am not impressed”, he told DAILY POST.

CREDIT: DAILY POST

Advertisement
Continue Reading

Trending