…As FG says $22.7 loan request meant for infrastructure***
The Central Bank of Nigeria (CBN) expects to achieve 2.38 per cent Gross Domestic Product (GDP) growth rate in the fourth quarter of this year.
Dr Hassan Mahmoud, the Deputy Director, Financial Policy and Regulation Department in CBN, said this in Yola at the 2019 workshop for financial journalists sponsored by the Nigeria Deposit Insurance Corporation (NDIC).
Mahmoud said that the GDP growth target would be an improvement over the third quarter growth rate of 2.28 per cent.
“If you are looking at the 1.1 per cent that we did in 2015/2016, and 2.28 per cent that we did in the third quarter of 2019, we will see that we have really moved substantially.
“It is difficult to sustain positive rate GDP growth rates that we are projecting that by the fourth quarter of 2019. We are going to be doing 2.38 per cent, that is CBN projection, the IMF is projecting same growth of 3.31 per cent.
On the wide gap between lending and saving rates in banks, he said that was dependent on customers’ negotiation skills.
He, however, said that it was the responsibility of CBN and NDIC to ensure that customers were not ripped off by the excesses of banks.
According to him, CBN is, however, creating ways to discourage the trend.
Mahmoud commended the permanece of some fixed income instruments in the financial market, saying that their yield rates had improved.
He, however, card that yield rates on treasury bills had dropped to as low as eight per cent of recent.
On pension funds, he said the stock had increased to about nine trillion naira of which the bulk could be invested in non-risky assets.
The paper he delivered was on the State of the Nigerian Economy and Implications for Stability of the Banking System.
Meanwhile, the Federal Government has said that the proposed amount of the 22.7 billion dollars requested by President Muhammadu Buhari in the External Borrowing Plan (2016 to 2018) would be invested in Infrastructure development and not consumption.
Minister of Works and Housing, Mr Babatunde Fashola, Minister of Finance, Mrs Zaynab Ahmed and Minister of State, Transport, Ms Gbemisola Saraki made this known in a public hearing before the joint house committees on Tuesday.
The house committees are Aids, Loans and Debt Management, and Rules and Business.
According to the Debt Management Office, Nigeria’s Total Public Debt Portfolio as at June 30 stood at $83.88 billion (₦25.7 trillion).
The 8th National Assembly had received the proposed projects for 2016 to 2018 Medium Term (Rolling) External Borrowing Plan put at 30 billion dollars.
The ministers, however, presented the same proposal at 22.7 dollars and gave reasons why the country should have funds as soon as possible.
They emphasised that the loans would promote infrastructure development and job creation.
The Minister of Finance said Nigeria that the country had a revenue generating challenge and stressed the need to invest in sustainable projects that would generate revenue.
Ahmed said the loan would be “strictly for infrastructure development.
“So that we can address the deficit that we have. We know we must comply with some criteria; every Kobo borrowed will be judiciously used,” she said.
Also, Minister of Works and Housing said Nigeria’s debt portfolio and debt service were being considered.
Fashola emphasized that investing in capital projects were needed to help the country achieve a self-sustaining economy.
“As we cannot ignore the concerns about debts, so we cannot ignore the concerns and demands for the provision of life sustaining infrastructure.
“We have passed budget of several hundreds of billions, but the reality is that over four years, we have never received full funding for any budget. And the reason is simple, there is a deficit, and we cannot finance it.
“Some of the roads we are investing in will last for upwards of 20 to 30 years if well maintained and not abused. For rail assets, usually the tracks will last for at least 100 years. Power plants like the Mambilla will be there for many decades.
“So, we will be spending today’s money to secure tomorrow’s assets that will sustain our growing population and growing economy.”
The Minister of State for Transport also said there was the need to complete Kano-Lagos and Niger Delta coast rails.