.........contrary to CBN’s $36 billion claim



With Nigeria spending N5.9 trillion on imports in the first quarter, irrespective of the preferred exchange rate, reserves of $15 billion would barely cover four months of import.

By Oladeinde Olawoyin


As Nigeria prepares for general elections next year that promise to be one of the most keenly contested in its history, evidence is emerging that the economy faces a double whammy: an empty treasury and rapid decline.

Government officials and business leaders knowledgeable about the situation say there have been concerns in Abuja and Lagos after an elected official drew the attention of the Central Bank of Nigeria governor, Godwin Emefiele, to the fact that Nigeria’s external reserves amount to only $15 billion, well below the $36 billion balance on the gross external reserves claimed by the bank.

With the country spending N5.9 trillion on imports in the first quarter of the year, irrespective of the preferred exchange rate, reserves of $15 billion would barely cover four months of import.

Financial analysts claim this would not have mattered much but for recent difficulties in different sectors of the economy, especially the export constraints that have seen the nation’s petroleum monopoly unable to add to the reserves in the last six months.

The NNPC’s inability to remit oil sales receipts to the CBN, despite elevated crude oil prices, is seen as one reason why the naira has nose-dived recently in the parallel market.

A banker who spoke on the understanding that her name would not be included in this report, said the reported balance on the gross external reserves has long concealed problems.

Not only is the gross balance on the external reserves not an accounting one (according to the CBN, the reserve is a 30-day moving average with effect November 2011), by not excluding the apex bank’s contingent liabilities, the report flatters the resources available to the central bank to defend the economy’s external position.

The elected official is believed to have briefed President Muhammadu Buhari on the gravity of the economic crisis. The presidency did not respond to a request for comment.

The NNPC’s transformation into a public limited liability company further compounds the problem. By not being able to remit export earnings directly into the federation coffers, it would mean that the apex bank will look to other sources of foreign exchange inflows.

Most of these sources have however been choked off by the direction and trajectory of the CBN’s monetary policy. All these mean that if the external reserves are depleted within four months at the current rate, the country will no longer be able to pay for imports of food, medicines and materials and spare parts required by industries, an economic crisis similar to what Sri Lanka is experiencing.

While continued export of crude oil by the NNPC may enable the continued import of refined fuel, experts do not expect this to stem the economic collapse caused by the end of the import of consumer and capital goods.

Widespread shortages will become readily evident as shops’ shelves will become empty while the prices of the few items available will keep increasing, putting them out of the reach of most citizens. CBN spokesperson Osita Nwasinobi did not respond to calls and a message seeking comments.


Fiscal Challenges

Nigeria is already facing serious fiscal problems, with its rising budget deficit, debt and shrinking revenue. In July, PREMIUM TIMES reported how the country’s fiscal position worsened in the first four months of the year as the cost of repaying debt surpassed the government’s revenue in the first quarter of 2022.

According to details of the 2022 fiscal performance report for January through April, Nigeria’s total revenue stood at N1.63 trillion while debt servicing stood at N1.94 trillion, showing a variance of over N300 billion.

Nigeria’s Minister of Finance, Budget and National Planning, Zainab Ahmed, warned that urgent action is needed to address the nation’s revenue challenge and expenditure efficiency at both the national and sub-national levels.

The report showed that gross oil and gas federation revenue for the first four months of the year was projected at N3.12 trillion but as at April 30, only N1.23 trillion was realised, representing a mere 39% performance. Despite higher oil prices, the report showed that oil revenue underperformed due to significant oil production shortfalls such as shut-ins resulting from pipeline vandalism and crude oil theft as well as high petrol subsidy cost due to higher landing costs of imported products.

Further analysis of the nation’s fiscal performance showed that deficit spending shot up to N3.09 trillion in the first quarter of 2022 as pro rata spending target for the period was N5.77 trillion, while the actual spending as of April 31 was N4.72 trillion.

On the other hand, as of April 2022, the nation’s retained revenue was only N1.63 trillion, 49% of the pro rata target of N3.32 trillion, putting the deficit between actual spending and revenues at N3.09 trillion.

In effect, the government borrowed to cover the deficit.

Meanwhile, a breakdown of the government’s actual spending within the period showed that N1.94 trillion was for debt service, N1.26 trillion for personnel costs, including pensions, while a meagre N773.63 billion was spent on capital expenditure.


‘Rescue Package’

PREMIUM TIMES understands that in addition to the president, state governors and other top officials have also been made aware of the severity of the crisis and some of them are already pressing the federal government to adopt specific measures to stem the crisis in the economy and address security threats.

Included in the economic rescue package proposed to the FG are measures in aid of fiscal stability: cutting federal expenditure by N8 trillion in the short term, immediate action to restore fiscal discipline, cutting the cost of governance across the three tiers of government, abandoning the fixed exchange rate policy, and limiting the CBN to its core monetary policy mandate.

About N7 trillion of the expected cut in public expenditure is fully dependent on ending the subsidy on petrol.

Until recently, the NNPC usually remits $3 billion monthly from crude oil sales to the nation’s reserves. But it has not remitted up to $200 million for up to a year now.

Last week, the Minister of Labour and Employment, Chris Ngige, called for restraint because the nation was broke. Addressing a media briefing to mark the 2022 World Day Against Child Labour in Abuja, he said the Nigerian government does not have money to prosecute capital projects next year, a development that might worsen the nation’s unemployment and poverty conditions.

“I can tell you that Nigeria is broke,” Mr Ngige said. “There is no money to fund capital projects next year. As you can see, the dollar that has been hovering around N500 and N600 is now above N700. The truth is that there is no money anywhere. The money that the FAAC (Federation Account Allocation Committee) has been sharing is money from taxes, customs and other revenue-generating agencies.

“The National Nigerian Petroleum Company Limited (NNPC) no longer remits money to FAAC. So, the situation calls for patriotism from all Nigerians. The lack of money to fund capital projects would have implications on capacity to create jobs. If jobs are not created, poverty will increase in the country.”

https://www.premiumtimesng.com/news/headlines/546650-nigeria-nears-economic-collapse-external-reserves-down-to-15-billion-contrary-to-cbns-36-billion-claim.html


Mynd44 lalasticlala

Can Nigeria still be redeemed again ?

Yes, but not through these two grandpapa in PDP and APC... If you give them chance they will finish Nigeria completely and blame the previous government for their failure like Buhari is still doing till today.. They blamed Jonathan again in the morning today...Lol.. The link...
https://punchng.com/apc-exonerates-buhari-blames-jonathan-for-incubating-terrorism/?utm_medium=Social&utm_source=Facebook#Echobox=1659548623
We need a leader that will lay a good foundation by starting afresh

We need younger competent and sound candidate..
A leader who will make Nigeria habitable is all we are seeking for now ... Even if such leader didn't perform miracle over night let him make an indelible mark or lay a foundation that will make the next coming government more easier and flexible to govern for the betterment of the majority not the few...


Anambra state was in bottomless pit of hell in all angles both in education, infrastructure and otherwise before the emergence of Peter Obi..

The foundation he laid in Anambra today is still being enjoyed by all Anambrarians both the upper class, middle class and lower class..


This is the last opportunity for Nigeria and Nigerians to get it right...


Don't vote "Business as usual men" whose administration will benefit only his family and circle of friends..

When I consider the amount of work the next president and his vice will have to do to get Nigeria back on track after this disastrous administration, I shudder.

One thing those of us who vehemently opposed a Buhari presidency in 2015 and 2019 can boast of today is that we are more analytical of issues, are better judges of character, and are not driven by sentiments.

For anyone who still has the interest of this country at heart, hear this: we cannot afford to have a president and a vice who will sit in their offices and wait to be given reports by supposed foot soldiers on the field. The President would practically have to be on the field himself and be on top of all critical issues. This will require a lot of physical stamina and mental alertness, no capping.

Between now and the handover, this country will be shredded to pieces by those who are in power today. Having seen that the country is almost bankrupt, they will make extraordinary efforts to squeeze out what ever they can so that they may have very stable financial base to keep up with their luxurious lifestyles.

If the new set of power brokers and appointees in 2023 notice that the president is not neck deep in trying to resolve the issues the country will be facing then, they will only try to cash out before the whole thing collapses. Leaving the masses to suffer extreme hardship.

Guys vote wisely. We need a frugal, energetic and mentally alert president in 2023 if we are going to come out of Buharis 8 years of mis-governance. And you all know who that person is.

TINUBU why ?

[img]https://giffiles./216/216372.gif[/img]

I just pray it doesn't collapse before Obi takes over.

I was pleasantly surprised when I saw that it was currently around $36B a few days ago. Began wondering why the naira was plummeting so much if it was still that 'high'.

Vote4ObiDatti:
I just pray it doesn't collapse before Obi takes over.

Nigeria has expired, no one can redeem her...

Ladies and gentlemen GEJ left $78bn in that reserve,

if we don't kill APC as a party Corruption will kill us

From top to bottom. Buhari and his deluded team only came to destroy.

If the present axis of evil (APC) continue to rule after next year's election, then one can rightly say goodbye to Nigeria. Nigeria's economy has never gotten so bad like now.

Islie:


.........contrary to CBN’s $36 billion claim



With Nigeria spending N5.9 trillion on imports in the first quarter, irrespective of the preferred exchange rate, reserves of $15 billion would barely cover four months of import.









https://www.premiumtimesng.com/news/headlines/546650-nigeria-nears-economic-collapse-external-reserves-down-to-15-billion-contrary-to-cbns-36-billion-claim.html


Mynd44 lalasticlala

Jez

Country would be in total collapse soon, these evil people campaign for change and Umbrella wizards and witch’s have intention of leaving the country once it’s done for
The heart of Men is really wicked
The military boys facing terrorists haven’t been paid
ASUU still on strike
But BUHARI HAS 1.4BILLION TO DO GIVEAWAY
AHAHAH

Good one! Let it happen, let APC and Buhari collapse the country kpatapkata so we can all eat and kill ourselves. So we can learn the hard way.

Nigerians must get sense..!
Maybe sense would return should the country collapse.

But there is still time, we have a third chance in 2023 to correct the wrongs of 2015/2019.

Please Nigerians let's give LP or PDP a chance!
I know they would be better than APC.

APC have brought untold hardship and suffer head to Nigerians and they are adding more and more suffer head on Nigerians.

But if you pay deaf ears to my advice for a better Nigeria.
How much is kerosene, cooking gas, fuel, electricity, bank charges, VAT, import duty , rice, beans, yam, oil etc?

How many families have lost their love ones at the hands of APC's failure to secure Nigeria?
Boko Haram, Iswap, bandits, Fulani herdsmen and kidnappers. Don't think you are safe because you are not a victim. We will all become potential victims if we don't vote right 2023.

If after seeing and witnessing all these under APC and you still vote APC in 2023 then you are irredeemable.

Good night Nigeria.

Yes
My plan is progressing smoothly

Good news is rare in Nigeria lately because Buhari and Osinbajo have destroyed Nigeria!

Buhari will tackle security.
Osinbanjo will tackle economy.
If we don't kill apc, APC will kill us all.

Any where you see that dullard call Buhari even if he is out of office, he deserved to be stoned to death

Nations do not collapse because their external reserve go down.
Suggesting such idea is misinformation so I will advice us to ignore such alarmist sensational reporting.

Meanwhile , you can check nations at risk of default. El Savador led by a Yahoo boy and Ghana led by a Professor are slugging it out for the two worst nations on earth at risk of collapase
Check my signature for freebies!

APC just dragged this country into mess.

Just wish 2023 will bless us with a new set of Leaders that can turn things around.

May God help us.

FreeStuffsNG:
Nations do not collapse because their external reserve go down.
Suggesting such idea is misinformation so I will advice us to ignore such alarmist sensational reporting.
Check my signature for freebies!

You are wrong. That's exactly what happened in Sri Lanka. They ran out of money to import essential goods.

The subsidy needs to go, but APC can't afford to remove it with elections coming. Yet, if they don't remove it, the country could become bankrupt. Catch 22.

With the way things are going N1,000 to a dollar is just a matter of months or even weeks away.

hmm

DeLaRue:


You are wrong. That's exactly what happened in Sri Lanka. They ran out of money to import essential goods.

The subsidy needs to go, but APC can't afford to remove it with elections coming. Yet, if they don't remove it, the country could become bankrupt. Catch 22.

With the way things are going N1,000 to a dollar is just a matter of months away.

whether you remove subsidy or not , naira will still reach#1000.

I believe Nigeria's economic situation is worse than many think.

Many state governments are effectively broke.

By most objective measures, the Federal government has been broke for many years, since at least a year before Jonathan left. In Jonathan's last year, his government was borrowing money to pay federal workers.

Buhari has failed to address the underlying problems of the economy. Instead, his government, like Jonathan's, has been secretly printing more naira than it discloses. With economic production experiencing little to no growth for many years now, and with the effect of Russia - Ukraine war sending many goods prices skyrocketing, it seems all the country's economic problems of the last decade are crystallising.

Unless there's a miraculous turnaround, the naira is heading for serious problems.

Bank of England is likely to increase interest rate aggressively tomorrow, in order to curb run -away inflation.

The US Federal Reserve will meet in September, when it is expected to increase US rates too.

These actions will increase the value of the Pound & US dollars even further, particularly against week currencies like the Naira & Ghanian Cedis.

October is likely to be a turbulent month for the Naira.

It's Deja Vu all over again, Welcome to 1983

DeLaRue:


You are wrong. That's exactly what happened in Sri Lanka. They ran out of money to import essential goods.

The subsidy needs to go, but APC can't afford to remove it with elections coming. Yet, if they don't remove it, the country could become bankrupt. Catch 22.

With the way things are going N1,000 to a dollar is just a matter of months or even weeks away.

O ga o
You just made it fashionable to make false claim with unimaginable cringeworthy gusto. This is why those in authorities anywhere in the world do not take most of you guys serious. You do not even understand the issues , you won't even calm down to understand issues and you are un-teachable.

Sri Lanka did not fail because external reserves went down/decreased.
Below is why Sri Lanka failed and has absolutely nothing to do with external reserves going down

The Sri Lanka crisis is said by both local and intetnational economic experts to have begun due to multiple compounding factors like tax cuts, money creation, a nationwide policy to shift to organic or biological farming, the 2019 Sri Lanka Easter bombings, and the impact of the COVID-19 pandemic in Sri Lanka

Your external reserves is savings in a foreign currency saved for the rainy days, supply forex source to your Central bank as the banker of the govt, intevene in forex supply and increase your chances of paying back debt in that foreign currency It fluctuates and may go down when you are on an expansionary economic plan and/or defending your own currency against that foreign currency like now that the global pressure caused a strong dollar requires increasing supply of the dollars locally by CBN.

FreeStuffsNG:

O ga o
You just made it fashionable to make false claim with unimaginable cringeworthy gusto. This is why those in authorities anywhere in the world do not take most of you guys serious. You do not even understand the issues , you won't even calm down to understand issues and you are un-teachable.

Sri Lanka did not fail because external reserves went down/decreased.
Below is why Sri Lanka failed and has absolutely nothing to do with external reserves going down

The Sri Lanka crisis is said by both local and intetnational economic experts to have begun due to multiple compounding factors like tax cuts, money creation, a nationwide policy to shift to organic or biological farming, the 2019 Sri Lanka Easter bombings, and the impact of the COVID-19 pandemic in Sri Lanka

People like you are just out to deceive people.

You said Sri Lanka crisis was due to:

1. Money creation. That's exactly what I stated in my second post above. Money creation means their government has been printing too much of their currency. Exactly what Jonathan was doing towards the latter end of his regime, and what Mr Buhari's government has been doing non stop.

2. Sri Lankan Govt policy to shift to organic farming. Well, the reason the government shifted to organic farming was because it no longer had the foreign reserve/currency to import fertilizer which the highly agrarian people of Sri Lanka required. The govt had run down its foreign reserves. Exactly what is going on in Nigeria now.

Its quite frankly astonishing and naive on your part to claim that running down Nigeria's foreign reserve has no effect on the economy.

In fact, there's a direct correlation between the amount of foreign reserve Nigeria has and the value of the naira.

Pack of Lies

Nigeria just won the International Financial Jackpot

Because of Ukraine invasion

almost all of Europe is jostling to buy Natural Gas from Nigeria and the Price is still Skyrocketing

okeysoninv:
whether you remove subsidy or not , naira will still reach#1000.

I agree.

But not removing the subsidy will make it happen faster (prob few weeks or couple of months). It may also precipitate a semi-collapsed economy.

Removing it now (every day that the subsidy remains in place is a day too late) will slow down the pace of naira devaluation and economic deterioration and give the next govt an opportunity to reverse the economic decline.

If subsidy is retained until after the election, the next gov't will feel sorry for itself.

okeysoninv:
whether you remove subsidy or not , naira will still reach#1000.

To be honest with you when one saw how the Naira plummeted in Buhari’s first year

It was Obvious it would take a miracle for £1 to not reach N1000 before Buhari leaves

FreeStuffsNG:
Your external reserves is savings in a foreign currency saved for the rainy days, supply forex source to your Central bank as the banker of the govt, intevene in forex supply and increase your chances of paying back debt in that foreign currency It fluctuates and may go down when you are on an expansionary economic plan and/or defending your own currency against that foreign currency like now that the global pressure caused a strong dollar requires increasing supply of the dollars locally by CBN.

^^^

Christistruth00:
Pack of Lies

Nigeria just won the International Financial Jackpot

Because of Ukraine invasion

almost all of Europe is jostling to buy Natural Gas from Nigeria and the Price is still Skyrocketing

Unfortunately, Nigeria's production level means we can't take full advantage of the current high price.

Most of Nigeria's gas is still in the soil. Increasing production massively & installing the necessary facilities to export the gas requires billions of dollars and will take up to 5yrs.

You can't just increase gas production & start exporting straight away.