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Economy & Politics

COVID 19: Debt Service Suspension Initiative extended to June 2021 – World Bank

The Debt Service Suspension Initiative shall now end in June 2021 as against the earlier deadline of 31st December 2020.

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World Bank accuses AfDB, Asian bank, others of worsening Nigeria’s debt problem , World Bank deploys $150 billion to save the world from global meltdown

The suspension period for the Debt Service Suspension Initiative (DSSI) scheduled to end on December 31, 2020 has been extended through June 2021, as contained on the website of the World Bank.

DSSI was established on May 1, 2020 by G20 countries on the advice of the World Bank and the International Monetary Fund (IMF), and has delivered about $5 billion in relief to more than 40 eligible countries.

READ: COVID-19: G-20 to extend debt relief to developing nations

The initiative is intended to help countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people all over the World.

READ: NCAA meets airlines over N22 billion debt, to implement payment plan

What you should know about the debt suspension initiative

  • 73 countries are eligible for the temporary suspension of debt-service payments owed their official bilateral creditors.
  • The G20 has also called on all private creditors to participate in the initiative on comparable terms.
  • Both the World Bank and the IMF are strongly supporting the implementation of the DSSI – by monitoring spending, enhancing public debt transparency, and ensuring prudent borrowing.
  • All the DSSI borrowers are committed to using all their freed-up funds towards increasing their social, health, or economic spending in response to the crisis, including disclosing all their public-sector related financial commitments (involving debt and debt-like instruments), as well as limiting their non-concessional borrowings to levels agreed under IMF programs and the World Bank’s non-concessional borrowing policies.

READ: World Bank hopes to cut down debts of poor countries rather than delay payments

Why this matters

Since the onset of the pandemic, many emerging markets are at significant risk of debt distress and a number of countries all over the world have announced their intention to seek debt restructurings.

COVID-19 has continued to pose unprecedented challenges and undue financial pressures on most countries across the world, more critical are the developing countries that already have huge debt burdens. In a period like this, the countries require significant liquidity and financing supports to deal with the pandemic, which the initiative is intended to serve.

READ: CBN sequesters N349.72 billion from banks in new CRR debits

Debt relief measures will help in providing some of the needed support, and the IMF and World Bank have announced enhanced lending facilities for developing country members to help in dealing with the COVID-19 pandemic crisis.

As the pandemic is yet to stem down or subside in most countries, with daily spikes reported in some countries; it has become necessary to extend the deadline to avoid financial overload that could lead to an inevitable crisis.

Johnson is a risk management professional and banker with unbridled passion for research and writing. He graduated top of the class with B.sc Statistics from the University of Nigeria and an MBA degree with specialization in Finance from Ambrose Alli University Ekpoma, with fellowships from the Association of Enterprise Risk management Professionals(FERP) and Institute of Credit and Collections management of Nigeria (FICCM). He is currently pursuing his PhD in Risk management in one of the top-rated universities in the UK.

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Economy & Politics

CBN extends Covid-19 forbearance for intervention loans by another 12 months

CBN will continue to charge an interest rate of 5% for its intervention loans for another 1 year.

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New CBN guidelines ban MMOs, PSPs, Operators from receiving diaspora remittances

The Central Bank of Nigeria has announced an extension of its regulatory forbearance for the restructuring of its intervention facilities by another 12 months.

In a circular signed by Dr. Kevin Amugo, the Director of Financial Policy and Regulatory. the apex bank said it will continue to charge its borrowers an interest rate of 5% per annum as against the 9% originally offered. The CBN had on March 20th reduced the interest rates on its intervention loans from 9% to 5% as part of its response to the economic crunch brought on by Covid-19 induced lockdowns.

The CBN also offered to rollover moratorium granted on all principal payments on a case by case basis. All credit facilities had been granted a one-year moratorium starting from march 1, 2020 when the pandemic first gripped Nigeria.

READ: Analysing the Central Bank of Nigeria’s Dollar Remittance Policy

See excerpt from Circular

“The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from 9% to 5% per annum for one-year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 Pandemic on the Nigerian economy.”

Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

Following the expiration of the above timelines, the CBN hereby approves as follows:
1) The extension by another twelve (12) months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities;

2) The roll-over of the moratorium on the above facilities shall be considered on a case by case basis.

READ: Nigeria attracts more FDI than FPI for the first time in 4 years

What this means

Companies who secured intervention funds from the CBN or through any of its on-lending banks will continue to service the loans at an interest rate of 5% per annum instead of 9%.

  • They can also get another year of not needing to pay back the principal sum collection. However, they will need to apply.
  • Whilst this move helps the small businesses continue to manage their cash flow, it means the CBN will record a reduction in its income extended under such facility.
  • Regulatory forbearance is a widely adopted concept during an economic crunch and it is meant to help stimulate businesses. These pronouncements if implemented will only affect those who borrow from the CBN or BOI but those who do not will miss out.
  • Download the circular here.

READ: CBN discloses conditions for assessing N100 billion credit facility, addresses ‘process problems’

 

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Economy & Politics

Senate endorses ex-Service Chiefs as Non-career Ambassadors

The Senate has confirmed President Buhari’s nomination of the immediate past service chiefs as non-career ambassadors.

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The Nigerian Senate has endorsed the nomination of the past serving Military Service Chiefs as Non-career Ambassadors.

This was confirmed during Tuesday’s plenary session and announced in a social media statement by the Nigerian Senate.

Their confirmation follows the consideration of the report of the Senate Committee on Foreign Affairs, Chaired by Senator Adamu Bulkachuwa.

According to reports, the Senate Minority Leader Enyinaya Abaribe, however, questioned the nomination and confirmation of the ex-service chiefs when the Senate had on 3 different occasions called for their sack.

Senator Abaribe also raised issues on the petitions against the former service chiefs and questioned why they were dismissed without explanations.

But Senate President Ahmad Lawan dismissed Senator Abaribe’s concerns, ruling that the nomination of the former service chiefs cannot be nullified simply because the upper chamber had called for their sack, noting that this is totally a different assignment.

In his concluding statement, the Senate President, Senator Lawan added that these nominees that have just been confirmed have served this country to the best of their abilities. He appealed to the executive to make sure they use their experience as military men to the best.

“These nominees that we have just confirmed are nominees that have served this country to the best of their ability. Our appeal to the Executive is to make sure they use their experiences as military men to the best,” Lawan said.

Lawan, on behalf of the senate, wished them a very successful career in their capacity as Non-Career Ambassadors.

What you should know 

  • Recall Nairametrics reported earlier this month that President Muhammadu Buhari nominated ex-Service Chiefs for Senate approval as non-career Ambassadors-Designate.
  • Their appointment came barely a week after their retirement as service chiefs and their replacement with new ones.
  • This led to a spate of criticisms from some Nigerians who felt that the nation’s security situation got worse under their watch.
  • They were reported to have tendered their resignation from their positions amid heightened calls that they should be sacked due to the increasing rate of insecurity across the country.

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