FG releases another N350b capital vote to reflate economy, as inflation climbs to 17.6%
To Begin Social Intervention Funding With N60b, Raise $1b From Eurobond Next Week.
The Federal Government yesterday said it has released another sum of N350 billion to reflate the economy and ease the hardship Nigerians are undergoing due to the recession.
This is coming on the heels of data released by the National Bureau of Statistics (NBS) which shows inflation has risen from 17.1 per cent last July to 17.6 per cent for August this year, recording a marginal rise of 0.5 per cent point year-on-year,
Addressing journalists on the state of the economy yesterday, Minister of Finance, Mrs. Kemi Adeosun said, since May when the current appropriation Bill was signed into law, government has so far released N420 billion for implementation of the capital projects aimed at improving money supply.
Meanwhile, the NBS data released yesterday reported that price increases were recorded in all Classifications of Individual Consumption by Purpose (COICOP) divisions which contribute to the headline index reflecting higher prices across the board.
According to the NBS data: “The major divisions responsible for accelerating the pace of the increase in the headline index were Housing, Water, Electricity, Gas.
The food index rose by 16.4 percent, year-on-year, in August, up by 0.6 per cent points from 15.8 per cent recorded in July. During the month, all the major food groups contributed to the increase in the food sub-index.
However, the pace of increase was slowed by fruits, potatoes, yam and other tubers as well as oils and fats, which reported slower increases during the month. In addition, imported foods as reflected by the Imported Food Sub-index increased by 0.2 per cent points from July to 20.7 per cent in August.”
It continued: “ Price movements recorded by the All Items Less Farm Produce or Core Sub-index increased by 17.2 per cent (year-on-year) in August, up by 0.3 per cent points from rates recorded in July (16.9 percent). During the month, the highest increases were seen in solid fuels, vehicles parts, books and stationeries, clothing and other articles of clothing.”
The Finance Minister, however, remained upbeat that the negative growth and higher prices will soon change for good when the results of the initiative being undertaken begin to bear fruit.
Her words: “ We have a plan to reflate the Nigerian economy to reposition it and take it to where the economy should be. What government wants to do is to step in and begin to spend and push more money into the economy.
“Now, the general thrust has not changed. We need to reflate the economy, we need to switch the economy from consumption driven to an investment driven economy. That is the long-term focus of the capital spending. That is why you see a lot of efforts on reducing ghost workers, working on efficiency, channeling that money into the investment on infrastructure.
“Since the budget was passed in May we have released and cash-backed fully N420 billion capital releases. As we speak now, we are about releasing another N350 billion.
One of the sectors we spent the money on, of cours, has been Power, Works and Housing and a lot has gone into Defence because we need to rebuild our army to continue in their new efforts.
Of course, you see activities have resumed on the abandoned four international airport projects. Agriculture has received significant funding because of the sensitivity of the sector and because food prices were rising and we needed to intervene to make sure that production is increased so that we can get food prices down.
“We are releasing another N350 billion with focus on the funding of about N60 billion in the social intervention cash-backed programmes which are important in terms of putting money into people’s pockets, including the N5,000 to some of the poorest and vulnerable and the home school feeding programme, which is very important.
“That will also generate some economic activity in a lot of our local governments with women and maybe men cooking for the children.
“There is also the Teacher Call in which graduates will teach in primary schools and earn stipends at the end of the month.
“So we will be cash-backing these programmes today as part of the N350 billion additional releases today, which will take our total capital releases to date to N760 billion.
“ We are raising money. The Eurobonds capital raising is on. We are about to appoint our advisers. We are raising additional $1billion. Two weeks ago we approved the external borrowing plan. That was very important because we said we would be borrowing the cheapest money first. We have approved that plan from the World Bank, the AfDB, with interest rates as low as 1.5 per cent and tenor as long as 40 years to intervene in some specific areas which include agriculture, education, health, rebuilding of the North East and railway projects which are very key to what we are doing.”