Global endorsement to steer Nigeria recovery
LAGOS, (CAJ News) – A Nigerian finance house is upbeat President Muhammadu Buhari administration will eventually resuscitate the economy owing to its endorsement internationally.
“The Buhari presidency and the APC (All Progressives Congress) secured a strong popular mandate in elections in March 2015, and enjoy widespread international goodwill,” First Bank of Nigeria’s (FBN’s) Capital Markets entity said.
“Their agenda is to diversify the economy away from oil and replace the rentier model. Previous administrations have gone down this road and abandoned the journey in the face of opposition from vested interests.”
FBN noted the federal government sought to achieve its agenda fiscally, and did not expect to be rescued by a marked recovery in the oil price.
The financial firm noted government’s fiscal plans were expansionary to allow for higher capital spending, funded by sharply increased non-oil revenue collection.
“This will require sizeable efficiency gains, anti-fraud measures and the squeezing of unremitted dues from all taxpayers. We do not think the FGN is fiscally irresponsible, and expect it to trim spending in the event of revenue underperformance.”
FBN projected an “unexciting growth dividend” this year.
“We see a pick-up in GDP growth to 4,5 percent in 2016 on the back of fiscal expansion and sector-specific reforms. Over time, household consumption will recover, leading to acceleration in growth.”
The financial house meanwhile projected the devaluation of the local currency, which has lost power against major currencies amid the economic decline.
Central Bank of Nigeria has resisted such calls previously.
The Naira is trading at US$0,005.
FBN forecast the exchange rate to buckle under the pressure.
“Exchange-rate stability remains the objective of the CBN. Weak oil prices and therefore weak fx (foreign exchange) inflows point, however, to a devaluation in 2016.”
– CAJ News
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