Treasury Report Update and Newsletter
ECONOMIC NEWS: President Yar’Adua yesterday signed into law the 2009 budget of N3.1trn. In December 2008, the President proposed an aggregate expenditure of N2.87trn and a deficit of N1.09trn (3.95% of GDP).
After due consideration of the budget proposal, the National Assembly passed the N3.1018trn budget with a deficit of N836.6bn (3.02% of GDP). As passed, the 2009 budget projects higher oil revenues than in the original proposal. Should there be low production coupled with average price fall to $40/barrel from the original budget projection of $45/barrel, fiscal deficit would increase to about N1.35trn (5.24% of GDP), which is well above the 3% allowable limit under the Fiscal Responsibility Act.
The National Economic Council (NEC) approved that N225bn ($1.5bn) be shared among the three tiers of government from the excess crude account. This amount is part of the $15bn accruable to the government from the excess crude money. The money is meant to cushion the likely effects of the drop in revenue shared in the month of January and February.
LOCAL MARKET NEWS
The Money Market OBB and Overnight rates closed yesterday at 9.75% and 27.0% respectively.
INTERNATIONAL MARKET NEWS
Update on Global Economic Crisis
The International Monetary Fund plans to raise lending to Africa and warned that the global economic crisis threatens political stability and even war on the poorest continent. The IMF warned last week that poor countries may need $25bn and possibly as much as $140bn in emergency aid to weather the global financial crisis. African currencies have been nose-diving as global credit markets dry up while Western countries reduced aid to the continent.
Fears that the British economy could shrink by 4% this year were raised after news that plant closures and short-time working have caused the longest series of falls in factory output in more than four decades. Collapse in world trade and a sharp reduction in domestic demand resulted in a 2.9% monthly decline in Britain’s manufacturing output despite the boost to exports from the depreciation in sterling.
Ben Bernanke, the chairman of the U.S Federal Reserve, said that the US could pull out of its economic downturn by the end of this year. Bernanke said that if the Obama administration succeeds in stabilizing the banking industry, there would be a good chance that the recession will end later this year and 2010 will be a period of growth.
The OPEC basket of twelve crude oil prices lost $0.45 yesterday to close at $43.69 versus $44.14 a barrel the previous day.