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CBN monetarist expresses worry over low govt revenue despite increase crude oil prices

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By Samuel Bankole

The Central Bank of Nigeria (CBN) monetarists have expressed concerns over the low revenue accretion to the federal government treasury despite the increase in crude oil price.

In his personal note to the January Monetary Policy Committee (NPC) meeting, Adeola Adenikinju said that “the recent increase in crude oil prices is not reflected in gross government oil revenue.”

Adenikinju noted that Government gross oil revenues for some months in 2020 were N454.34 billion in April, N284 billion in May, N254.34 billion in September, N201.12 billion in October and N225.41billion in November.

“Whereas between April and November 2020, price of Bonny Light rose steadily from $12/b to $43/b respectively. This is a worrisome development,” Adenikinju.

He, however, advised the federal government to sell off its moribund assets and explore the use of off-budget means to finance infrastructure in the country.

READ ALSO: Nigeria to make provision for Covid-19 vaccines in a supplementary budget by March~Finmin

On his part, Mike Obadan noted that the current trend of oil prices is good news to the Oil Exporting Countries.

According to him, a sustenance of the current prices though will strengthen Nigeria’s fiscal position and foreign exchange reserves.

“It should lead to increase in government revenues and accretion to external reserves which will reduce pressure on the foreign exchange market and exchange rate.

Obadan also expressed concerns over the increasing financing of budget through deficits financing, which are being financed mostly with domestic and foreign borrowing.

“Although the exigencies of the covid-19-induced economic crisis have increased the pace of deficit financing and debt accumulation, poor fiscal management must be fingered.

“It signals the onset of fiscal dominance as the national debt levels have risen to such a level that the country is unable to repay or service the debt with only its revenue, except through further borrowing to remain solvent,” Obadan stated in his note.

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