Skip to main content

Era Of Multiple Exchange Rates Coming To An End As Nigeria's Revenue Leaks

Era Of Multiple Exchange Rates Coming To An End As Nigeria's Revenue Leaks

The era of multiple exchange rates is coming to an end in Nigeria according to the Minister of Finance, Zainab Ahmed. For years, there have been talks about Nigeria adopting a unified multiple exchange rate, and now, the idea has been embraced by the Nigerian government.

In a Ministry of Finance document, Ahmed was said to have stated that Nigeria will unify the multiple exchange rates in order to generate more local currency from its dollar inflows. Ahmed said the rate will be managed in a sustainable way, Reuters reported. The new development comes at a period the country is having forex problems caused by the oil price crash and the economic fallout of the coronavirus pandemic in Nigeria.

The COVID-19 outbreak had hit global market, affecting demand for oil, leading to a crash in oil as demand declined. Nigeria had been limiting its dollar sales to the central bank which sells to commercial banks that later sell to the public only for goods or raw materials that are not produced or can't be found in Nigeria.

Nigeria Initiates Measures To Protect Weak Economy

The multiple exchange rate regime is being used by the Central Bank of Nigeria (CBN) to manage pressure on the naira. According to Ahmed, oil firms will be directed by the government to sell forex to the CBN rather than the Nigerian National Petroleum Corporation (NNPC). This is expected to help with the forex problem currently being faced within the country.

It was also reported that one of the measures to protect revenue from oil will include deregulation of petroleum prices. The document stated that over a period of 12 months, the policy will be implemented. The measures are expected to aid the weak revenue sources of the government.

Nigeria's Revenue Sources Leaking Heavily

Nigeria's revenue sources has been hit hard by the coronavirus pandemic following a shortfall in revenue from oil, Companies Income Tax, Value Added Tax, Nigeria Liquefied Natural Gas, mining and mineral. According to documents from the Budget Office of the Federation, Nigeria's federation account is bleeding significantly, with a revenue shortfall of about N1.01 trillion in the first three months of 2020.

According to the documents obtained by thewhistler.ng, the Federal Government generated about N950.55 billion compared to the projected revenue target of N1.96 trillion earmarked for the first quarter of this year. This represents about 52 per cent decline or N1.01 trillion shortfall.

Further breakdown of the revenue projection and actual earnings showed that revenue from oil suffered a 30 per cent decline, resenting a shortfall of N195.37 billion after generating N464.03 billion in the first three months of 2020, lesser than the projected revenue target of N659.4 billion.

Labels:

Comments

Post a Comment

Popular posts from this blog

N-Power: FG extends Batch C enrolment Aug 8

FG extends Batch C N-Power enrollment to August 8 Add caption The Federal Government says the enrolment for Batch C scheme of the N-Power Programme which started on June 26 will now close on August 8. Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar-Farouq, who disclosed this via  Twitter on Sunday night, said over 5 million applications have been received for the scheme. The Federal Government plans to enrol 400,000 applicants in the Batch C scheme. Batches A and B of the programme who are about to exit the programme held a rally at the National Assembly Complex last week, requesting FG to employ them as well as pay them a grant of N600,000 each. Providing an update on the development, the minister said on Sunday, “I received the news of a protest at the National Assembly by N-Power Batch A and B beneficiaries who presented a list of demands which we are reviewing and will address as practically possible. “Let me reiterate that th...
Post a Comment
Read more

Local investors take charge as foreign investors remain cautious amid FX scarcity

Local investors take charge as foreign investors remain cautious amid FX scarcity Renewed positive sentiments in the global space dominated markets in the month of May as investors’ optimism for a speedy economic recovery continues to support appetite for risky assets. This is also coming on the heels of ease in lockdown and gradual reopening of economic activities. In Nigeria, domestic investors took the driving seat at the nation’s equities market in the month of May as they took positions in cheap and dividend-paying bellwether stocks. On the other hand, foreign investors who are unable to move their funds from the country due to FX scarcity rolled their money back into the equities market. In the month of May, total value of transactions executed by domestic Investors out performed transactions executed by Foreign Investors by 40percent. According to data released by the Nigeria Stock Exchange, total transactions executed between May and April revealed that total domest...
Post a Comment
Read more

NAIRA WEAKENS TO LOWEST IN THREE YEARS

NAIRA WEAKENS TO LOWEST IN THREE YEARS The Naira yesterday weakened to the lowest in over three years in the parallel market due to increased demand for dollars amid foreign-currency shortages. The local currency depreciated to N495 to a dollar yesterday, lowest since February 23, 2017, widening the gap with the official rate of N379.5 to over 30 per cent. The currency traded in the interbank market at 389.74 as of 4:54p.m. in Lagos. Agency reports quoted traders as alleging a groundswell of diversion of dollars, a development which heightened scarcity of the green back in the parallel market this week. There is a diversion of inflows away from official channels to the parallel market due to the gap in rates, Murega Mungai, trading desk manager for Aza Finance said in a note Thursday. The market spread has created arbitrage opportunities for recipients of remittances such as exporters and private individuals. Pent up demand in the foreign exchange market is not unprecedente...
Post a Comment
Read more