- Presidency says Nigeria needs World Bank loan to fund 2017 budget
A report from the National Bureau of Statistics (NBS), on Wednesday, indicated that the inflation rate, which stood at 18.55 percent in December 2016, climbed to 18.72 percent in January 2017. The NBS report showed that the Consumer Price Index (CPI), which measures inflation, increased in January by 0.17 percent from the rate recorded in December, just as increases were recorded in all divisions that yield the Headline Index.
Yesterday’s report stated that communication, restaurants and hotels, again, recorded the slowest pace of growth in January, growing at 5.1 per cent and 8.4 per cent (year-on-year), respectively. “The faster pace of growth in headline inflation, year on year, were bread and cereals; meat, fish, oils and fats; potatoes, yams and other tubers; wine and spirits; clothing materials and accessories.
“Others are electricity, cooking gas, liquid and solid fuels; motor cars and maintenance; vehicle spare parts and fuels; and lubricants for personal transport equipment as well as passenger transport by road,” the report said.
The report also showed that, on a monthly basis, headline inflation was driven by passenger transport by air, fuels and lubricants for personal transport equipment; liquid fuels, cooking gas, oils and fats; fruits, cheese and eggs; fish, meat and bread; as well as cereals. The bureau noted that the food index increased by 17.82 per cent (year-on-year) in January, by 0.43 percent from the rate recorded in December, 2016, (17.39 percent). “During the month, all major food sub-indexes increased, with soft drinks recording the slowest pace of increase at 7.8 per cent(year on year).
“The highest increases were seen in housing, water, electricity, gas and other fuels, with education and transport growing at 27.2, 21.0 and 17.2 per cent, respectively,” NBS said. The report further showed that on a month-on-month basis, the headline index increased, although at a slower pace last month. It stated that index increased by 1.01 percent point in January, 0.05 percent from 1.06 percent rate recorded in December 2016.
“The urban index rose by 20.31 percent (year-on-year) in January from 20.12 percent recorded in December, and the rural index increased by 17.34 percent in January from 17.20 percent in December. “On month-on-month basis, the urban index rose by 1.03 per cent in January from 1.08 per cent recorded in December, while the rural index rose by 1.00 per cent in January from 1.04 per cent in December. The bureau said the corresponding 12-month year-on-year average percentage change for the urban index increased from 17.05 percent, in December, to 17.91 percent in January, while the corresponding rural index also increased from 14.54 percent, in December, to 15.18 percent in January. According to the NBS, the Composite Food Index rose by 17.82 per cent in January, 2017. It attributed the rise in the index to increase in prices of bread and cereals, meat, fish, oil and fats. “On a month-on-month basis, the food sub-index increased by 1.29 percent in January and reduced by 0.04 percent points from 1.33 percent recorded in December.”
Meanwhile, the “All Items Less Farm Produce” or Core sub-index, which excludes the prices of volatile agricultural produce eased by 17.9 percent during the month, 0.20 per cent points from 18.1 percent recorded in December, as all key divisions which contribute to the index increased. The report further showed that the core sub-index increased by 0.68 percent in January, 0.06 percent points higher from 0.62 percent recorded in December. The highest increases were recorded in electricity, gas, passenger transport by air, liquid fuel and lubricants for personal transport equipment and solid fuels.
“Nigeria’s inflation rate increased from 9.6 percent recorded in December, 2015, to 18.55 percent in December, 2016, as a result of sharp increase in the prices of meat, bread, fish, vegetable, and other products,” the NBS said.
In the meantime, the Federal Government yesterday said it is yet to decide on the size of World Bank loan it intends to apply for to close the funding gap in its 2017 budget. The Minister of Budget and National Planning, Udoma Udo Udoma, made the disclosure at the end of the longest Federal Executive Council (FEC) meeting (over seven hours), presided over by the Acting President, Yemi Osinbajo.
Udoma was responding to a question on whether the World Bank loan formed part of council’s deliberations and the decisions reached. He said, ”the figure will depend on the (2017) budget approved by the National Assembly. We are waiting for the passage of the budget by the National Assembly so that we will know the budget gap or the actual deficit before we can go to the World Bank for loan.”
Nigeria entered recession last year after 25 years having similar experience.. It needs to plug a gap in its record N7.3 trillion 2017 budget to stimulate the economy. It had planned to apply for a World Bank loan last year, but the process ground to a halt because a World Bank source said it failed to submit its economic recovery plans by the end of December as initially promised.
The African Development Bank (AfDB) has been holding back the second, ($400 million), tranche of a $1 billion loan while awaiting a reform plan from the government. Nigeria will present its economic proposals to the AfDB at the same time as the World Bank, government officials recently said.
The Federal Government had on Tuesday said that the oversubscription of its recent eurobond by almost eight-fold (orders in excess of $7.8 billion compared to a pre-issuance target of $1 billion) showed the world’s strong appetite for Nigeria and that it was evidence the country will be out of recession soon. This is coming even as government is planning to launch another savings bond.
Meanwhile, the Budget Minister said that the peace in the Niger Delta is helping governments’ revenue inflow. He said: “Because of the funding constraints, the budget has a deficit, I travelled with the Minister of Finance and CBN Governor to market our eurobond. As you can see, the eurobond was oversubscribed by over eight times, so the funds are coming in. There is more stability in the Niger Delta, so more monies are coming in.”
Udoma also said the council yesterday spent hours fine-tuning the Economy Recovery Growth Plan. He also said the council had extension discussion on the plan. According to him, the growth plan is still being fine-tuned. “But a lot of inputs were made by council members and it is virtually ready for the President to launch. However, we are doing some fine-tuning and during this period we also do some final consultation before the president launches the plan,” he said.
He said the plan, when approved, is expected to drive economic recovery and lay the foundation for longer term growth as well as improve the competitiveness of the Nigerian economy. Udoma said: “The goal of the plan is to have an economy with low inflation, stable exchange rate and a diversified inclusive and sustaining growth. The proposed initiatives outlined in the plan are designed to address the country’s poor competitiveness, improve business environment and attract investment and infrastructure, especially power, roads, rails and ports.”
He said that jobs and social inclusion were also key focus areas of the plan. Udoma gave the immediate execution priorities of the plans as agriculture and food security; energy-particularly power and petroleum product sufficiency; industrialisation- focusing on small and medium size enterprising; transportation, which is very important as an infrastructure requirement to get the economy really moving; and stabilisation of the micro-economy environment.
The minister also said the council spent a lot of time looking at implementation, adding that one of the means of ensuring implementation was to have a delivery unit which, he said, would be in the Presidency. He gave the key principles of the plan as tackling constraints to growth; leveraging the power of the private sector – this is very important and this is why we have been having extensive consultations and discussions with the private sector; promoting national cohesion and social inclusion; allowing market to function; approving the core value for which this country stands.
Udoma, however, insisted that the plan was still being fine-tuned. He said, “reviews are being incorporated and at a date to be announced soon, the president will launch the plan. Let me add that there will be additional consultations that we agreed in cabinet that we will be making and one of the people we will be consulting will be labour before the plan is finalised.”
The Citizen with additional report from The Sun
