Business

Debt Servicing May Take All Of Nigeria’s Revenue By 2026, IMF Warns

Published

3 years ago

June 1, 2022

The Nigerian government may spend nearly 100 per cent of its revenue on debt servicing by 2026, the International Monetary Fund (IMF) has warned.

The Bretton Wood institution raised concerns over Nigeria’s fiscal conditions, adding the nation spends 89 per cent of its revenue on debt.

The IMF’s Resident Representative for Nigeria, Ari Aisen, made this known on Monday in Abuja while presenting the fund’s latest Sub-Saharan Africa Regional Economic Outlook report.

IMF also warned that with fuel subsidy payments averaging N500 billion monthly, total expenditure on subsidy could hit a record N6 trillion by the end of the year.

“I think the biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue, almost 100 percent, is projected by 2026 to be taken by debt service,” the IMF official said.

“So, the fiscal space or the amount of revenues that will be needed, and this, without considering any shock, is that most of the revenues of the federal government are now in fact 89 percent and it will continue, if nothing is done, to be taken by debt service.”

The IMF said that it is a reflection of the low revenue of the country, adding that it needs to mobilise more revenue to be able to have macroeconomic stability.

“It has become an existential issue for Nigeria,” Mr Aisen warned.

Subsidy
The IMF official lamented that as an oil exporter, Nigeria is unable to take advantage of the current global high oil prices to build reserves. The nation is equally confronted by low earnings due to the subsidy on petroleum products, he said.

Earlier in April, the Nigerian Senate approved N4 trillion for petrol subsidy in 2022, following two separate requests by the Nigerian president to the National Assembly. The government had shelved a planned move to suspend the subsidy payment a few weeks earlier.

In the midst of the uncertainties, the World Bank Group urged Nigeria to rethink its fuel subsidy regime and multiple exchange rates policy. Speaking during a media briefing at the World Bank/International Monetary Fund Spring Meetings in Washington DC, the president of the World Bank Group, David Malpass, said that resources being expended on subsidy could be channeled to other sectors of the economy to accelerate growth.

“One is that they are expensive because they go to everyone and they are often used by people with upper incomes than by people with lower incomes so they are not targeted,” he said.

“So, we encourage that when there is need for subsidy, either food or for fuel, that it should be carefully targeted at those most in need of it. And so, we have encouraged Nigeria to rethink its subsidy effort.”

In its intervention Monday, the IMF official reiterated the World Bank’s warning, adding that subsidy payments could worsen the nation’s fiscal challenges due to poor earnings from oil.

Speaking on the economic outlook for the continent, the IMF official advised governments across the region to reduce debt vulnerabilities, balance inflation and growth, and manage foreign exchange rate pressures.

“Unrivalled potential for renewable energy and an abundance of minerals, a successful transition offers opportunities for diversification and job creation; ensuring the green transition is also a just transition,” he said.

Business

Naira Appreciates At Official Market

Published

3 weeks ago

May 24, 2025

Editor

The Naira, which has seen steady appreciation against the Dollar all week, closed stronger on Friday, trading at ₦1,580.44 in the official forex market.

Data from the Central Bank of Nigeria’s website show the Naira gained ₦4.51k against the Dollar on Friday alone.

This marks a 0.28 per cent appreciation from Thursday’s closing rate of ₦1,584.95 in the official foreign exchange window.

The local currency maintained consistent strength throughout the week, recording gains daily.

On Monday, May 19, it traded at ₦1,598.68; on Tuesday, at ₦1,590.45; and on Wednesday, at ₦1,584.49.

These gains suggest increased investor confidence and improved forex supply, contributing to the naira’s performance.

Meanwhile, the CBN, at its 300th Monetary Policy Committee meeting held Monday and Tuesday, retained the Monetary Policy Rate at 27.5 per cent.

Business

BREAKING: Again, Dangote Refinery Cuts Petrol Price

Published

3 weeks ago

May 22, 2025

Editor

The Dangote Petroleum Refinery has announced a nationwide reduction in the pump price of Premium Motor Spirit (PMS), commonly known as petrol, with new prices now ranging between ₦875 and ₦905 per litre, depending on location.

The ₦15 per litre cut applies across all regions and partner fuel stations, and was confirmed via an official announcement posted on Dangote Refinery’s social media channels on Thursday.

Major marketers participating in the new pricing regime include MRS, Ardova, Heyden, Optima Energy, Techno Oil, and Hyde Energy — partners in the distribution of Dangote-refined products.

Under the previous pricing structure, Lagos residents paid ₦890 per litre, while prices reached ₦920 in the North-East and South-South regions. With the latest adjustment, Lagos now pays ₦875 per litre, while the North-East and South-South will see prices drop to ₦905.

A regional breakdown of the revised prices is as follows: Lagos: ₦875, South-West: ₦885, North-West & Central: ₦895, North-East & South-South: ₦905 and South-East: ₦905.

In its announcement, Dangote Refinery encouraged consumers to purchase fuel only from authorised partner stations and urged the public to report any cases of non-compliance via its official hotlines: +234 707 470 2099 and +234 707 470 2100.

“Our quality petrol and diesel are refined for better engine performance and are environmentally friendly,” the company said.

Business

Naira Appreciates Against Dollar At Foreign Exchange Market

Published

4 weeks ago

May 17, 2025

Editor

The Naira ended the trading week on a positive note, recording a bullish close on Friday at the official foreign exchange market.

It appreciated N1,598.72 against the U.S. Dollar, reflecting a modest gain that suggests continued efforts to stabilise the local currency.

According to figures published on the Central Bank of Nigeria’s official website, the Naira strengthened by N0.60k against the Dollar on Friday.

This upward movement represents a 0.03 per cent appreciation compared to the N1,599.32 exchange rate recorded at the close of trading on Thursday.

The local currency had shown some resilience earlier in the week, posting gains on both Tuesday and Wednesday trading sessions.

On Tuesday, the Naira appreciated by 0.02 per cent, followed by a stronger gain of 0.21 per cent on Wednesday.

These improvements were seen as positive indicators of growing investor confidence and increased supply in the foreign exchange market.

However, Thursday’s trading session saw a minor setback, with the Naira slipping by N2.62 against the Dollar.

This loss equated to a 0.16 per cent depreciation, dampening the midweek rally seen in previous sessions.

Market analysts attributed Thursday’s dip to a brief increase in Dollar demand from importers and other market participants.

Despite this, the week still closed on a positive note, with the Naira showing signs of gradual recovery and increased market stability.

Analysts continue to monitor the Central Bank’s policies, especially interventions aimed at improving Dollar liquidity and managing demand pressures.

The Naira’s performance in the coming weeks will likely depend on consistent supply inflows and investor sentiment across the broader economic landscape.