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Playing ostrich? Nigeria plans to spend $2.2 billion Eurobond on fuel subsidy

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Nigeria’s Finance Minister, Zainab Ahmed, has revealed that the country plans to tap 2 billion euros ($2.2 billion) this month or next of the money it raised in a Eurobond sale last year and target more local borrowing in 2022 to help fund its costly petrol subsidies as oil prices rise.

“Rising oil prices has put us in a very precarious position because we import refined products … and it means that our subsidy cost is really increasing,” she said on the side-lines of an Arab-African conference in Cairo.

In February, Nigeria’s President Muhammadu Buhari in a letter sent to the National Assembly requested for consideration and approval to accommodate the additional fuel subsidy funding. The request was for an additional provision of N2.557 trillion for petrol subsidy payments in 2022 noting that country’s budget deficit would rise to 4% of GDP as the government eyes new domestic borrowing. The deficit was originally set at 3.42% of GDP.

Despite her increasing debt profile, Nigeria’s government in January postponed its planned removal of subsidy on petroleum products till further notice. Petrol subsidy payments reportedly gulped overN1.15 trillion 2021 alone, resulting in low revenue for federal, state and local governments to cater for developmental projects.

But the price of oil has soared. The West African country depends almost entirely on imports to meet its domestic gasoline needs, even though it is a crude oil exporter. It is also facing shortages after taking delivery of some unusable substandard gasoline.

While it remains unclear by how much the commencement of active local refining will reduce the landing cost of petrol, the Chairman of Dangote Group, Aliko Dangote, recently disclosed that its refinery would begin operations in Q3 2022, starting with a capacity of 540,000bpd.

Nigeria’s daily demand for refined crude oil was estimated at 442,000bpd, as of 2018, which still comes below the proposed initial capacity of 540,000bpd. Many other modular refineries are also expected to come on stream. Beyond a possible reduction in the landing cost of petrol, achieving self-sufficiency in refining petrol will help conserve the country’s scarce FX.

Ahmed said that the government was working with lawmakers to boost revenues and that the rise in oil prices means that borrowings will increase more than planned.

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Nigerien President, Mohamed Bazoum wants employment quotas for African immigrants

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Niger’s President Mohamed Bazoum wants employment quotas for African immigrants tailored to job needs from European countries.

President Bazoum made the position in an interview with an Italian newspaper, La Repubblica. on Friday.

The president’s argument is that the quota will address European countries’ needs for its labour market and could help resolve the problem of illegal migration and human trafficking.

“In France, Spain, and Italy you have many jobs in sectors of employment where Africans can work,” Bazoum said.

“These numbers need to be established, country by country, and then the consulates entrusted with the responsibility of enforcing them.”

Surveys of African migrants in or heading toward Europe reveal that the majority were either employed or in school at the time of their departure. Yet, they felt despair over their economic prospects.

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IMF Chief, Ceyla Pazarbasioglu, to visit China over Africa’s growing debt profile

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As the debt profile of many African countries continues to rise, the International Monetary Fund strategy chief, Ceyla Pazarbasioglu will travel to China next week for another high-level meeting.

Her travel is part of efforts to press the world’s largest sovereign creditor for quicker progress on debt restructurings for countries in need.

The IMF chief had called for debt restructuring arrangements for Zambia and Chad to be completed shortly.

Pazarbasioglu said it was critical to move forward and that “outreach to China next week is very important, at the highest levels.”

“It’s moving – very slowly, but it’s moving,” Pazarbasioglu said, noting that the participation of mining company Glencore Plc in the Chad treatment was also “a very good sign” that “even the most difficult private sector participants” were participating.

She said the Paris Club of official bilateral creditors had taken years to hammer out their debt relief processes, and China was learning, although she noted that the debt issues facing borrowing countries now were acute.

“The problem we have is that we don’t have that time right now because these countries are very fragile and dealing with debt vulnerabilities,” she said. “What we need is speed.”

Pazarbasioglu said the IMF would continue to press for changes to the Common Framework, including a freeze in debt payments when countries apply for a debt treatment, as well as clearer procedures and timelines for action, and ensuring comparable treatment for private creditors.

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