EUR 132.56 For Business Accounts Only

Breakfast Report - 1 August 2016

Breakfast Report

The Week Ahead

Nigeria’s Government is currently in talks with the African Development Bank (AFDB) for a $1 billion loan in a bid to finance the 2016 budget. This is in pursuance of the Federal Government’s decision to begin external borrowing in Q3 and reflects its resolve to increase foreign borrowing relative to domestic borrowing. We expect that the loan, when eventually finalized, would support the budget performance.

Unveiling the Medium Expenditure Framework and Fiscal Strategy (MTEF) for 2017 to 2019, the Ministry of Budget and National Planning last week proposed a budget benchmark of $42.5/bbl (up from $30/bbl in 2016) whilst leaving output unchanged at 2.2 million barrels per day for 2017 fiscal year (despite incessant disruptions in oil operations in the Niger Delta), thereby, putting estimated oil revenues at N7.8 trillion at an assumed exchange rate of N290/$1. Also, for 2018 and 2019, estimated prices was set at $45 and $50 per barrel respectively and volumes stood at 2.3 and 2.4 million barrels per day. GDP growth was projected to average 3.77% during the reference period driven by an expected rise in tax collections and export revenues and inflation rate was slated at 12.92%, 11.88% and 12.57%.

The Nigerian equity market wavered through red and green closes this past week as investors digested a slew of mixed earnings which mostly missed their numbers. Overall, the NSE ASI climbed 127bps for the week, putting year to date returns at -2.21%.

We expect mixed trading pattern to persist in the coming sessions as investors continue to react to the mixed earnings numbers.