27 Sep

Daily Watch – NASS urged to amend Appropriations Act, CBN keeps feet on its brakes

  • The FG has asked the National Assembly to amend its spending law to enable a debt program to settle ₦2.7 trillion ($8.6 billion) worth of obligations including pensions and salary arrears, according to a letter from Vice President Yemi Osinbajo. The letter, read out in the Senate on Tuesday, requested amendments to the law, which stipulates allocation of government spending, to allow Nigeria to fund recurrent expenditure from proceeds of the debt rather than just capital projects. The Fiscal Responsibility Act states that proceeds of government borrowings can only be applied towards capital expenditure. Osinbajo said the amendment was to provide the legal backing for the use of the debt to meet the obligations. The vice president sent the letter to the Senate last month while President Muhammadu Buhari was on medical leave in Britain. The letter was read out after the Senate reconvened following a seven-week recess.
  • The CBN held its benchmark interest rate at 14 percent on Tuesday, its governor said following a Monetary Policy Committee meeting. Godwin Emefiele said six of the seven members of the committee who took part in the meeting had voted to hold the main rate, while one member voted for a cut. It was the seventh meeting in a row at which the main rate was held by the bank. “Loosening at this time would exacerbate inflationary pressures and worsen the exchange rate and inflationary rate condition,” said Emefiele of the committee’s decision not to cut borrowing costs.
  • The UK’s Serious Fraud Office will charge two former executives of collapsed oil company Afren on Wednesday with alleged fraud over payments they received via secret companies relating to business deals in Nigeria. The SFO said in a statement former Afren Chief Executive Osman Shahenshah and former Chief Operating Officer Shahid Ullah would appear at Westminster Magistrates Court charged with two counts of fraud and two counts of money laundering. “(They) stand accused over payments they received via secret companies they controlled relating to over $400 million of Nigeria business deals,” the SFO said. “The alleged fraud is claimed to have led to the collapse of the $2.6 billion oil giant by their administrators,” it said. Afren sacked its chief executive, chief operating officer and two associate directors after an independent review into unauthorised payments in 2014 found evidence of “gross misconduct”.
  • Guaranty Trust Bank has informed the NSE that it intends to launch an invitation to holders of its $400 million (6.0 percent) notes due in 2018 to tender any and all of their notes for purchase by GTBank in exchange for cash. Through the offer, the bank seeks to deploy its available U.S. dollar liquidity to the repurchase of the notes ahead of its scheduled maturity in November 2018. This liability management exercise allows GTBank to efficiently manage its liquidity by addressing debt maturing in 2018. However, the extent to which this goal can be achieved through the offer will depend on the number of notes that will be tendered in the offer, given the voluntary nature of the offer. The notes purchased by GTBank under the offer will be cancelled. The bank announced that the commencement and settlement dates for the offer are 25 September and 5 October 2017 respectively. The lender has retained the services of Lucid Issuer Services Limited as tender agent and Exotix Partners, J.P. Morgan Securities and Morgan Stanley & Co as Dealer Managers in connection with the offer.