6 — SATURDAY Vanguard, MARCH 30, 2013
IMF urges FG to reduce fuel subsidy, wind down AMCON’s operation BY OMOH GABRIEL, Business Editor
T
HE International Monetary Fund IMF has asked the Federal Government to reduce poorly-targeted fuel subsidies, adopt a rule to set the reference oil price in the budget, and fully operate the Sovereign Wealth Fund as soon as possible. The Fund however, advised that efforts should be intensified to mobilize public support for these reforms. This was contained in the Funds financial score card on Nigeria weekend at the conclusion of its Article IV consultation with the government. The IMF however noted that widespread unemployment and poverty in Nigeria remained key challenges for policymakers, and called for renewed efforts to make economic growth more broad-based and inclusive. It also “underscored the need for the government to improve tax administration, better prioritize public expenditure, strengthen the public financial management, and improve the fiscal framework.” The report further said “Executive Directors (of IMF) commended the authorities for prudent macroeconomic policies that have underpinned a strong economic performance in recent years and looking ahead supported the authorities’ strategy of consolidating the fiscal position while opening up policy space for needed investment in infrastructure and human capital. ’’The Directors considered the current tight monetary stance to be consistent with the authorities’ objective of reducing inflation to single digits. They also took note of the staff ’s assessment that the exchange rate in real effective terms is broadly in line with fundamentals. Directors commended the authorities’ success in restoring financial stability after the 2009 banking crisis. In light of this achievement, they recommended winding down the operations of
the asset management company to curb moral hazard and fiscal risks. “Directors welcomed the Central Bank’s commitment to address supervisory and regulatory gaps identified in the Financial Stability Assessment Update, particularly the need to strengthen cross-border supervision and the regime against money laundering and terrorism financing. Directors concurred that wideranging reforms are key to make growth more inclusive. They agreed on the importance of supporting sectors with high employment potential, not through protectionist measures or tax incentives but rather with initiatives to improve governance, the investment climate, and competitiveness. Directors welcomed reforms underway in the energy sector, and looked forward to an early passage of the Petroleum Industry Bill which would boost investment, government revenue, and fiscal transparency. They also encouraged the authorities to promote market-based access to credit for small- and medium-sized enterprises. On February 6, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the 2012 Article IV consultation with Nigeria.” Nigeria’s macroeconomic performance has been broadly positive over the past year. Real gross domestic product (GDP) growth is projected to have decelerated slightly to 6.3 percent, reflecting the effects of the nationwide strike in early 2012, floods in the fourth quarter of 2012, and continued security problems in the north. Annual inflation increased from 10.3 percent (end-of-period) in 2011 to 12.3 percent in 2012, owing mainly to the adjustment of administrative prices of fuel and electricity; large increases in import tariffs on rice and wheat; and the impact of floods in Q3. The external position has strengthened and international reserves rose from US$32.6 billion at end-2011 to US$44 billion at end-
2012 (5½ months of prospective imports), driven by sustained high oil prices, stricter administration of the gasoline subsidy regime, and strong portfolio inflows. The fiscal policy stance was tightened in 2012 and fiscal buffers are being rebuilt. The non-oil primary deficit of the consolidated government is estimated to have narrowed from about 36 percent of nonoil GDP in 2011 to 30.5 percent in 2012, mainly due to expenditure restraint. Monetary policy remained tight in 2012 in response to inflationary pressures. The Central Bank kept its policy rate unchanged during the year but raised the cash reserve requirement for banks from 8 percent to 12 percent and lowered allowable
Mrs Ash Ulukanli Ince, General Manager/ Environmental Engineer, Ashkan World Treat and Engineer David Amuka, CEO Cosmoscem Emma ltd during the exhibition. Photo Lamidi Bamidele
open foreign exchange position for banks. Financial soundness indicators point to continued improvements in the health of the banking system.
In 2013, growth is expected to recover to above seven percent. Inflation is projected to decline below 10 percent, supported by the tight monetary policy stance
and ongoing fiscal consolidation. The key downside risks are a large drop in world oil prices; and slow progress in building consensus around key fiscal reforms.
Why bunkering, kidnappings are back in Niger Delta — Security agencies executing the pipeline conBY SONI DANIEL, Regonal Editor, North
B
ARELY four years after Niger Delta militants denounced violence against the state and accepted an unconditional amnesty, the perpetrators of the twin evil of oil bunkering and kidnapping for ransom, are back to work even with greater steam and sophistication, Saturday Vanguard has learnt. The late President Umaru YarÁdua declared amnesty for repentant militants on June 25, 2009, paving the way for the return of a large cache of weapons by militants and the relocation and reintegration of the former warlords from the vast creeks of the Niger Delta region to the society. However, indications emerged yesterday that kidnapping and bunkering, which had significantly died down in the wake of the general pardon to militants, had resumed in earnest in most parts of the creeks. Findings by Saturday Vanguard revealed that the attempt by the government to compensate major warlords in the region with mouth-watering con-
tracts running into billions of Naira for the protection of pipelines was responsible for the renewed level of attacks and oil theft in the Niger Delta. A top security expert in the Niger Delta told Saturday Vanguard that the award of multi-million contracts by the Federal Government to selected former Niger Delta militant leaders for the protection of oil pipelines was responsible for the resurgence of the new wave of criminality in the area. The source, who has been working with other security agencies in the Niger Delta for many years, pointed out that most of the Niger Delta warlords who got the oil pipelines surveillance jobs betrayed the government by not taking care of their foot soldiers who were part and parcel of bunkering, kidnapping and destruction of oil facilities before the ‘accepted amnesty’. The Source said, “The real problem is that the militant leaders whose companies were used in getting the lucrative contracts have not taken care of their supporters, a situation that has led to anger and muscle-flexing
currently brewing in the Niger Delta. “Apart from that, the award of the jobs to persons who understand the creeks more than anyone else is like paying an armed robber to protect your house. “That is why these people who claim to have renounced militancy are picking and choosing where to steal oil and who to abduct because they now have a licence directly from the government. “Although the Federal Government is aware of the brewing crisis of confidence between the ex-militant leaders and their supporters, there is nothing the administration can do to eliminate the problem, especially as some of the warlords have fled the country after drawing huge sums of money without
tract. Another competent source told our correspondent that the government did not want any confrontation with the militants so as not to cause any disaffection between them, especially as the crucial election year draws closer. One of the warlords and a top politician in the region, are reported to have fled the country after withdrawing over N2 billion from an account that was opened for the management of a pipeline contract given to one of them from Bayelsa State. The militant is said to have refused to return home to account for the money even after being informed of his mother’s demise. Security agencies are however more worried that despite their surveillance across the region; militants in the Niger Delta have continued to abduct foreigners from oil and cargoladen vessels coming to the country via the vast creeks. The security agencies are currently trying to wrestle an Indonesian, who was seized from a ship off the Bonny Island in Rivers State about a month ago, from unrepentant kidnappers, who are demanding the payment of N20 million ransom.