Opinion

CPI Report: Slow but Steady Rise in Consumer Prices

The April 2020 Consumer Price Index report published this week showed an 8bps uptick in headline inflation to 12.34% Y-o-Y from 12.26% in March 2020, the highest since April 2018. We attribute the marginal increase to weak economic activity. We note the increase in double-digit core inflation at 10.0% from 9.7% in March 2020, the highest since April 2018. Likewise, food inflation was marginally higher at 15.03% from 14.98% respectively. This is despite the planting season and the disruption to the agriculture value chain in Nigeria due to COVID-19.

COVID-19 Compels Sharp Fiscal Adjustments

As falling oil prices and economic lockdowns mean weaker revenue prospects in 2020, fiscal policymakers have been compelled to match budget ambitions with current realities. Accordingly, the Federal Executive Council (FEC) on Wednesday approved the revised Medium Term Expenditure Framework (MTEF) for 2020-2022 and the proposed amendment to the 2020 budget, with both awaiting the approval of the National Assembly.

2019 Debt Report: FG’s Debt Profile Still Aloft

Data published by the Debt Management Office (DMO) earlier in the week revealed a 12.4%Y-o-Y rise in total public debt to ₦27.4tn (US$84.1bn) from ₦24.4trn (US$79.4bn) in FY:2018, following a 21.1% growth in FG’s borrowings to ₦23.3tn. The FG’s total domestic debt grew 11.7% Y-o-Y to ₦14.3tn as promissory notes surged 121.1%Y-o-Y to ₦732.6bn, driven by the Federal Executive Council (FEC)'s approval of ₦3.4tn new notes for the settlement of accumulated arrears. Similarly, total FGN Savings bonds and FGN bonds also rose 17.9% and 12.7%Y-o-Y to ₦12.7bn and ₦10.5tn respectively.

Covid-19 Dampens Global Growth Prospects

The International Monetary Fund (IMF) and the World Bank held 2020 spring meetings this week, the first virtual spring gathering in light of the current pandemic. This year’s meeting included briefings on global and regional economic outlook, especially in the context of the COVID-19 pandemic. This week we review global and Nigeria’s growth prospects in the face of the public health and economic crises caused by COVID-19.

Global Growth Projected to Contract by 3.0% in 2020

COVID-19: Sub-Saharan Africa’s 1st recession may be in 25 years –World Bank

The World Bank Group says Coronavirus (COVID-19), is taking Sub-Saharan Africa towards its first recession in 25 Years.

The bank stated this in a statement where it explained that growth in Sub-Saharan Africa had been significantly impacted by the COVID-19 outbreak, and was predicted to fall sharply from 2.4 per cent in 2019 to -2.1 to -5.1 per cent in 2020.

The bank stated that it based its forecast on the latest Africa’s Pulse, the World Bank’s twice-yearly economic update for the region.

COVID-19 Spillovers: Are the Proposed Economic Stimulus Measures Enough?

Globally, countries are responding to the unprecedented economic challenges brought by COVID-19.  In Nigeria, the CBN recently announced some stimulus measures to support the real sector given COVID-19 spillovers. Some of the measures announced include the reduction of interest rate to 5.0% from 9.0% and a one-year moratorium on all CBN intervention facilities. The apex bank also created a ₦50.0bn targeted credit facility to support households and SMEs as well as a special credit support of ₦1.1tn for the manufacturing and the healthcare sectors respectively.

Petrol Price Reduction to ₦125/Litre… Laudable yet Questionable

Reeling from the current disruptions caused by the COVID-19 pandemic, fiscal and monetary policymakers are announcing measures to support the economy. The FG through the Petroleum Products Pricing Regulatory Agency (PPPRA) reduced the price of petrol for the first time since 2015 to ₦125.0/litre from ₦145.0/litre, effective March 19, 2020.

Coronavirus: Coordinated action, key to stability in global economy – IMF

The Managing Director, International Monetary Fund (IMF), Kristalina Georgieva, says as COVID-19 (Coronavirus) spreads, increased coordinated action is key to boost confidence and provid stability to global economy.

She said this in a publication titled “Policy Action for a Healthy Global Economy”, part of a special blog series on the response to the coronavirus.

Georgieva said that while quarantining and social distancing was the right prescription to combat COVID-19’s public health impact, the exact opposite was needed to secure the global economy.

Telecoms: Diving into Nigeria’s New SIM Card Policy

According to press reports last week, the Federal Government of Nigeria (FGN), via the Minister of Communications and Digital Economy, issued a directive to the regulator of the telecommunications sector, the Nigerian Communications Commission (NCC), to revise the policy on SIM card registration and usage. The Minister stated that the policy update was based on the need to combat the spate of insecurity in Nigeria. In our view, this will have a neutral effect on telecoms companies (telcos) earnings in the near-term.

The Petroleum Industry Bill (PIB) …So Much Noise, So Little Substance

Nigeria’s legacy of inaction in passing urgent reforms is perhaps best captured by the Petroleum Industry Bill (PIB). The Bill is over a decade in waiting since the original version was put forward by the Executive in 2008. The most recent update was the split of the comprehensive Bill into four parts in 2015 to ease passage. The new versions are the Petroleum Industry Governance Bill (PIGB), Petroleum Host and Impacted Community Bill (PHICB), Petroleum Industry Administration Bill (PIAB) and Petroleum Industry Fiscal Bill (PIFB).

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