Following the rifts caused by 2019 budget between the executive and ligislative arms of governmrnt, Lagos state governor Akinwumi Ambode has been summoned to appear before the state house of Assembly.
The Assembly accused the governor of not presenting the budget and spending it when it had not been passed.
Ambode had sent the 2019 budget to the House in December against the tradition of laying the budget before the House.
The Speaker of the House, Mudashiru Obasa, on Monday told lawmakers it was important to give the governor a fair hearing over the 2019 budget.
He said, “There have been violation and it is obvious that the attorney-general, finance commissioner and commissioner for budget and economic planning have failed to advise the governor.
“We should let the people know that a budget that is yet to be approved is being spent, which is why we could not attend to the governor on the budget on Monday, January 21.
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“We must let him come to explain what happened. You cannot commence expenditure without passing the budget. We call on the governor to come within a week to explain himself or we can start gathering signatures for impeachment,” he said.
The lawmakers had reacted to a report presented by the Deputy Speaker of the House, Wasiu Eshinlokun-Sanni, who is the chairman of a committee set up to look into the issues surrounding the 2019 budget.
Members of the committee are Moshood Oshun, Gbolahan Yishawu, Dayo Saka-Fafunmi and Abiodun Tobun.
Eshinlokun-Sanni stated that the budget and economic planning commissioner, Segun Banjo, said no money had been spent for the year.
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Argentina imposes currency controls to support economy
Argentina has imposed currency controls in an attempt to stabilise markets as the country faces a deepening financial crisis.
The government will restrict foreign currency purchases following a sharp drop in the value of the peso.
Firms will have to seek central bank permission to sell pesos to buy foreign currency and to make transfers abroad.
Argentina is also seeking to defer debt payments to the International Monetary Fund (IMF) to deal with the crisis.
What has the government said?
In an official bulletin issued on Sunday, the government said that it was necessary to adopt “a series of extraordinary measures to ensure the normal functioning of the economy, to sustain the level of activity and employment and protect the consumers”.
The central bank said the measures were intended to “maintain currency stability”.
It also said that while individuals can continue to buy US dollars, they will need to seek permission to purchase more than $10,000 (£8,223.50) a month.
The measures will apply until the end of this year.
What triggered the current crisis?
Argentina has been struggling with a financial crisis, which was exacerbated by the president’s defeat in a recent primary poll.
The peso fell to a record low last month after the vote showed that the business-friendly government of President Mauricio Macri is likely to be ousted in elections in October.
Mr Macri was elected in 2015 on promises to boost Argentina’s economy with a raft of liberal economic reforms.
But the country is in a deep recession. It has one of the world’s highest inflation rates, running at 22% during the first half of the year.
Argentina’s economy contracted by 5.8% in the first quarter of 2019, after shrinking 2.5% last year. Three million people have fallen into poverty over the past year.
How is the move likely to be received?
Ordinary Argentines have traditionally had little faith in their own currency, preferring to convert their spare pesos into dollars as soon as possible
They don’t trust financial institutions much either, so they resort to what is locally known as the “colchón bank” – that is, stuffing their dollars under the mattress.
Anecdotal stories abound of people keeping money buried in the garden, hidden in the walls or even stuffed in heating systems – occasionally with disastrous consequences if there is an unexpected cold snap.
When you consider Argentina’s history of rampant inflation and currency volatility, they arguably have a point.
But it does mean that any restrictions on people’s ability to buy dollars have an enormous psychological impact.
CBN signals end to official rate regime for naira
The Central Bank of Nigeria (CBN) may soon allow the naira to freely find its value, with a possible depreciation on the official rate, usually pegged at about N305/$, an update on its website has indicated.
The development is signaling an end to the most criticised foreign exchange rate window, which has been used mostly for government’s critical businesses that affect the public, particularly the importation of petroleum products.
If the move sees light of day, it will mean that the value of the naira at the official window is depreciated with its concomitant closure of the peg.
Yesterday, the apex bank, as opposed to the usual publication of the fixed exchange rate, opted to publish that “the rate will be market-determined.”
According to a report, the President of Shippers Association of Lagos State, Jonathan Nicol, said the Nigeria Customs Service had allegedly directed importers to pay for duties at the rate of N326 per dollar against the official rate of N306, citing an order from the CBN.
Also yesterday, the interbank rate depreciated by 0.2 per cent to N360.43 per dollar at the close of trading, while the parallel market remained steady at N360 per dollar.
A move toward a market-determined exchange rate would be welcomed by investors, who have long accused government of some level of capital controls and bemoaned multiple exchange rates.
The Chief Executive Officer of Nigerian Investment Promotion Council, Yewande Sadiku, was quoted as saying the apex bank was in talks with other agencies to move to a single rate for the nation’s currency.
For an economic analyst at Ecobank, Kunle Ezun, “putting that on the website means the central bank is gradually moving towards a single exchange-rate window. It is making the exchange rate more liquid to attract more inflows.”