FG urged to is­sue bond to clear sub­sidy back­log

Daily Trust - - BUSINESS - From Sun­day Michael Ogwu, La­gos

The Fed­eral Gov­ern­ment has been urged to con­sider float­ing a bond pro­gram to cover the back­log of pay­ment to oil mar­keters in­clud­ing For­eign Ex­change (FX) dif­fer­en­tials to date,

The for­mer Chair­man of de­funct En­ter­prise Bank Ltd Mr Emeka On­wuka who made the rec­om­men­da­tion at the book launch, ti­tled: Dy­nam­ics of the Nige­rian Fi­nan­cial sys­tem, in hon­our of Phillips Oduoza, the out­go­ing Group Man­ag­ing Di­rec­tor of the United Bank for Africa (UBA), yes­ter­day in La­gos.

While de­liv­er­ing his key­note ad­dress, On­wuka said, “the back­log of the amount be­ing owed the oil mar­keters is largely fi­nanced by the banks, a lot of which have be­come out­stand­ing in the books of the banks and push­ing their non­per­form­ing loan ra­tios higher.

He ar­gued that since the gov­ern­ment is strug­gling to pay, the bank should be made to subscribe to the ex­tent of their ex­po­sure to the oil mar­ket, there­fore, switch­ing the risk as­sets to liq­uid as­sets in im­prov­ing their bal­ance sheet.

“The gov­ern­ment should also con­sider in­tro­duc­ing a petroleum prod­uct con­sump­tion tax that will be used to re­deem the bond as they ma­ture. This is been done in other econ­omy. Ghana is at the verge of im­ple­ment­ing same.”

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