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Credit Crunch to Ease by Qtr 2 Ending
- By Bukola Idowu
- Published April 14th, 2010
- MoneyWorld
- Unrated
MR Akinsowon Dawodu, president of the Financial Market Dealers Association (FMDA), has said that t he credit crunch being experienced in the Nigerian financial sector is expected to ease by the end of the first half of the year.
Speaking at the bi-monthly public discourse of the Financial Correspondents Association of Nigeria (FICAN) at the weekend, Dawodu noted that the Nigerian economy is expected to grow by at least 5.4 per cent by the end of the year.
According to Dawodu, the dropping interest rates are expected to slow down and start its rise by the second half of the year. “Interest rate decline which was triggered by the August 18, 2009 audit report and bailout are expected to stay low in 2010 but with a possible pick up in the second half
“The federal government will have to fund its huge deficit via domestic borrowing and this should ultimately put pressure on interest rates, while the Central Bank of Nigeria (CBN)might have to raise rates much later in the year if inflationary pressures persist”, he said.
He added that the naira would stabilise while the stock market is also expected to end the year on a positive note. The growth of the economy he however hinged on a stable oil price.
“The naira should float and be stable in the first half of 2010 and should trade within a band for the rest of the year if, oil prices are stable or higher and oil production are stable or higher”, he said
Noting that with a proposed expenditure of N4.6 trillion giving a deficit of about N1.5 trillion, he said government is expected to borrow more this year with most of it coming through local currency bonds.
He however urged the federal government to ensure that it spends more on infrastructures that would reflect in the lives of Nigerians. He noted that although, government expenditure which had grown by over 60 per cent compared to 2009’s figure, was on the high side, it would be justified if it makes life better for the citizenry.
Dawodu who explained that the federal government has a poor record for capital budget implementation, said “the size of the deficit might ultimately be over-stated”
Adding that there was a significant growth in Capital Expenditure which went up by 133 per cent, he said the federal government has only nine months to implement the aggressive budget, which is based on a quite optimistic assumption of $67 per barrel and 2.35 million in daily production.
Speaking at the bi-monthly public discourse of the Financial Correspondents Association of Nigeria (FICAN) at the weekend, Dawodu noted that the Nigerian economy is expected to grow by at least 5.4 per cent by the end of the year.
According to Dawodu, the dropping interest rates are expected to slow down and start its rise by the second half of the year. “Interest rate decline which was triggered by the August 18, 2009 audit report and bailout are expected to stay low in 2010 but with a possible pick up in the second half
“The federal government will have to fund its huge deficit via domestic borrowing and this should ultimately put pressure on interest rates, while the Central Bank of Nigeria (CBN)might have to raise rates much later in the year if inflationary pressures persist”, he said.
He added that the naira would stabilise while the stock market is also expected to end the year on a positive note. The growth of the economy he however hinged on a stable oil price.
“The naira should float and be stable in the first half of 2010 and should trade within a band for the rest of the year if, oil prices are stable or higher and oil production are stable or higher”, he said
Noting that with a proposed expenditure of N4.6 trillion giving a deficit of about N1.5 trillion, he said government is expected to borrow more this year with most of it coming through local currency bonds.
He however urged the federal government to ensure that it spends more on infrastructures that would reflect in the lives of Nigerians. He noted that although, government expenditure which had grown by over 60 per cent compared to 2009’s figure, was on the high side, it would be justified if it makes life better for the citizenry.
Dawodu who explained that the federal government has a poor record for capital budget implementation, said “the size of the deficit might ultimately be over-stated”
Adding that there was a significant growth in Capital Expenditure which went up by 133 per cent, he said the federal government has only nine months to implement the aggressive budget, which is based on a quite optimistic assumption of $67 per barrel and 2.35 million in daily production.
