2017 Budget: ₦1.2 Trillion Released for Capital Projects

The Federal Government through the Debt Management Office (DMO) has released a statement saying it for financed for half year ending January 2018, a total of 1.2 trillion in capital projects for the 2017 Appropriation Act passed into law by the National Assembly in July of 2017. In a statement it said “The disbursement of 1.2 trillion over a short period of 6months to capital, is a strong and positive development in Nigeria. The release of such a large amount for capital is a strong demonstration of the commitment of the present administration to prioritize improvement in infrastructure in order to stimulate economic growth and development”

The Debt Management Office says it has raised a total of 1.254 trillion in line with its statutory mandate of funding federal budgets, from the domestic markets, through Federal Government of Nigeria Bonds, Treasury Bills, Sukuk & Green Bonds. It says the total funds raised so far was consistent with the provision for new borrowing in the 2017 Appropriation Act.

The Debt Management Office says it raised $2.8bn in the International Capital Market through a $300m Diaspora Bond in June 2017 and a $2.5bn Eurobond in November 2017 which together represent about 80% of the 1.0675 trillion (about $3.5bn) provided as external borrowing in the 2017 Appropriation Act. The outstanding in $700m provided by External Borrowing is expected from multilateral sources.

In November 2017, Fitch & Moody’s revised the Sovereign Credit Rating on Nigeria’s BB+ to – with a stable outlook, citing rising debt, increasing appetite by Nigerian Deposit Money Banks for Government Securities (that poses a systemic risk for the Banking System), lack of a wide tax bracket that undermines the ability of the Government to diversify their sources of revenues from Oil & Gas.

Kelvin Emmanuel

About Kelvin Emmanuel

The Oil producing Angola in the Southern part of Africa faces what Nigeria faced 12months ago; a distortion in its exchange rate with a difference between the official markets and the parallel black markets. One dollar through the official window buys you 166 kwanza, while one dollar through the black market buys you 400 kwanza. Nigeria faced the same challenge 12months ago, when the distortion between the official and black markets was as much as the official markets trading at 306 with the parallel market ranging from 450 through to 510. The Central Bank Governor of Angola, Jose de Massano Junior announced in Luanda “We will stop having a fixed foreign exchange, we will adopt a floating regime of foreign exchange”. Angola faces exactly the same challenges and has been applying the exact same responses to an exchange rate crisis like using its foreign reserves that was sitting at $26bn to defend the currency kwanza, with no success so far, even though the external reserves has dropped to $14bn. Angola relies on Oil receipts for 80% of its government revenue, 90% of its inflow and 50% of its GDP. Angola is a $194bn economy that has been growing at an average of 10% on the back of rising oil prices since 2002 when its 27 year old civil war that started in 1975 ended. The state national oil company Sonangol reports that it produces up to 1.8m barrels of crude oil daily, however the government that until now has being led by the family dynasty Jose Eduardo dos Santos until recently when succession saw power transferred to Joao Lourenco, reports that the oil price rout in 2015/2016 that saw prices drop to as low as $28 per barrel caused ripples across the economic structures of the government, upsetting government revenues, its ability to fund its budget, capital project funding, foreign direct investments into the economy as a result of a currency crisis that was driven by the widening of gap between the official and street window of the kwanza, that until now has been pegged in a fixed exchange rate regime to the US Dollar.