HealthTop Story

FG disagrees with Moody’s downgrade, says We have seen improvements in revenue in 2017

416

The federal government disagrees with rating agency Moody’s Investors Service Wednesday to downgrade Nigeria from a B1 stable to a B2 stable rating.

“We strongly disagree with the premise and must address some of the conclusions upon which the decision rests, said a joint statement from the Federal Ministry of Finance (FMF), Central Bank of Nigeria (CBN) and the Debt Management Office (DMO).

“While we respect the right of Moody’s to make this decision, we strongly disagree with the premise and must address some of the conclusions upon which the decision rests.”

TEXT

Since Nigeria was last rated by Moody’s (as B1 stable) in December 2016, Nigeria has successfully emerged from a protracted recession and recorded important improvements across a broad range of indices, including:

–       A return to economic growth of 0.55% in Q2 2017, and returning business confidence, as evidenced by a PMI index of 55.0.

–       A stable foreign exchange window for importers and exporters, with improving liquidity and convergence of the parallel and official rates.

–       Significantly improved foreign exchange reserves, now totalling $34 billion. 

–       Increased oil production, combined with stable and now improving oil prices.

–       A slowly improving revenue profile, with non-oil revenue (principally taxes) up 10%.

–       Month on month improvements in inflation levels since January 2017, with inflation continuing to trend downwards.

–       Strong year on year improvement on the World Bank Ease of Doing Business Rankings from 169th to 145th place, a 24 place move in one year.

–       In 2016, the highest capital expenditure deployment since 2013, making investments in critical infrastructure to support further growth.

At the heart of Moody’s rationale is the need for Nigeria to improve non-oil revenue aggressively. This is absolutely and directly aligned to the government’s priorities. This is critical to our economic development and is the basis for the establishment of a stable and inclusive economy, which can withstand global shocks and has the resources to increase investments in our infrastructure.

We have put in place a number of measures to improve our collection and FIRS has made good progress in increasing revenues, particularly when considering that the economy is still recovering from the oil price shock. Examples include:

–       Introduction of a Tax Amnesty (the on-going Voluntary Assets and Income Declaration Scheme (VAIDS)), which is showing positive results.

–       Plugging leakages and deployment of technology driven revenue management strategies.  An example is Health Pay, a pilot cashless revenue project in the health sector, which has recorded material increases in revenue.

We have seen improvements in revenue in 2017. Fiscal revenues are linked directly to both the performance of the economy and the number of tax payers contributing. As a result of the foundation that has been established in 2017, we expect, similar positive trends in 2018.

Our revenue initiatives are changing the mix of revenue sources available to government from the traditional oil or debt to a combination of oil, debt and domestic revenue.  For example the 2018 budget includes N710 billion proceeds from the restructuring of the Government’s equity in the JV oil assets. The reform is aimed at increasing private sector equity participation to improve efficiencies in the sector and also provides revenue to the Government which will be deployed solely and exclusively for creating new assets in Nigeria.

Moody’s highlights that while our debt levels remain low, interest is consuming a larger portion of revenue. It should be noted we are implementing a very prudent fiscal and debt management strategy to reduce the cost of our debt. Given the relatively higher domestic interest rates, we are focusing on longer term external borrowing with an aim to re-balance our domestic and international debt portfolio to a 60:40 split over the coming years. Our existing proposal to refinance US$3 billion of treasury bills through external borrowing is expected to reduce Nigeria’s debt servicing costs, further improving our fiscal position.  We also expect this strategy to help to reduce the “crowding out” effect of Government borrowing in the domestic markets. The challenges that are highlighted in the Moody’s rating are clear, and are being addressed by the government, with the environment having improved significantly since the last period of assessment.

Leave a comment

Related Articles

NIPR Spokesperson of the Year 2025: GOCOP Congratulates NNPCL’s Femi Soneye on Prestigious Award

The Guild of Corporate Online Publishers (GOCOP) has extended its heartfelt congratulations...

Update: Lagos Building Collapse Claims 5 Lives, 13 Survive

The devastating multi-storey building collapse which occurred on Saturday morning at Oremeta...

Ojodu-Berger Building Update: Rescue Teams Pull Out Five Survivors

Five people have so far been rescued from the rubble of the...

Breaking: Lagos Building Collapse: Many Feared Trapped as Multi-Storey Building Crumbles

A four-storey building on Saturday morning collapsed in Lagos with occupants trapped,...

NDLEA Raid in Abuja Turns Violent, Three Operatives Sustain Gunshot Injuries

Three National Drug Law Enforcement Agency (NDLEA) officers were hospitalized on Thursday...

Tinubu Urges Nigerians to Embody Easter Values, Military to End Insecurity

President Bola Tinubu has sent a heartfelt message to Christians across the...

NNPCL’s New GCEO, Ojulari, Unveils Visionary Plans for Energy Transformation, Growth

Mr. Bashir Ojulari, the newly appointed Group Chief Executive Officer of the...

NIPR Spokesperson of the Year 2025: NNPCL’s Olufemi Soneye A Shining Star in Public Relations

In a resounding testament to his exceptional communication skills and dedication to...

Attack in Kebbi: Terrorists Kill 3 Customs Officers, Torch Patrol Vehicle

Terrorists have launched a deadly attack in Kebbi State, killing at least...

Pres. Tinubu Inaugurates National Census Committee, Gives Three-Week Deadline for Report

President Bola Tinubu has inaugurated a high-level committee on the forthcoming national...

Strategic Partnerships Key to Achieving Presidential Mandate, Says NNPCL GCEO

Joycelyn Ellakeche Adah The newly appointed Group Chief Executive Officer of NNPC...

15 Million Nigerians at Risk of Flood Disasters in 2025 – VP Shettima

At least 15 million Nigerians are at risk of flood disasters in...

US set to strengthen energy ties with Nigeria, says NNPCL Spokesman, Soneye

The United States and Nigeria have reaffirmed their commitment to collaboration in...

Updated: You Are Answerable to National Assembly, not Presidency, Reps tell Rivers Administrator

Speaker of the House of Representatives Tajudeen Abbas has directed Rivers State...

Just in: Reps Speaker inaugurates 21-man committee for Rivers Assembly oversight

In line with the House of Representatives’ March 20 promise following the...

Sexual Harassment: VC Suspended, Acting VC Appointed

Following allegations of sexual harassment by a senior female university staff member,...

VP Shettima Launches Tinubu’s Human Capital Development Strategic Plan, Roadmap In Uyo

Vice President Kashim Shettima has arrived in Uyo, Akwa Ibom State, to...

Tinubu Discusses Economic, Security Partnership with US Pres. Trump’s Adviser

President Bola Tinubu met with Massad Boulos, Senior Advisor for Africa in...

Ahead of National Sports Festival in Ogun, NSC opens media accreditation

The National Sports Commission (NSC) has announced the opening of media accreditations...

Ex-Green Eagles of Nigeria captain, “Chairman” Christian Chukwu, dies at 74

Christian Chukwu, one of the greatest football players, former captain and coach...