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Low foreign investments ahead of 2019 elections to jerk up exchange rate–PwC

Released 2018 economic outlook by PwC has given an indication of estimated 7% exchange rate depreciation in the Import and Export (I&E) window to N386/USD, as FX demand increases and foreign investments slow ahead of the 2019 elections.

Generally, investment inflows during election year in volatile countries are usually associated with investors’ anxiety which boils down to marginal drop in investment traffic, pending stability after swearing in of new administration and understanding of the economic focus of the new government.

PwC also noted that “Overall, the CBN maintains its multiple exchange rate regime, sustaining its intervention in the various FX markets.

“We expect revenues to underperform budget by 34% as a shortfall in non-oil revenues offsets the impact of the strong recovery in oil revenues.

“Consequently, debt service to revenue expands to 45%, higher than the projected 31% in the budget.

“Fiscal deficit widens by 67% to N3.4 trillion (2.4% of GDP). We expect that the deficit will be funded by an increased issuance in the domestic bond market.”

The Outlook also traced the major near-term risks to economic stability to lowered oil prices, disruptions to crude oil productions and political instability in 2017.

Also in 2017, PwC recalled that the federal government, through the Debt Management Office, issued various types of debt instruments like the Sukuk, FGN Savings bond and Eurobonds in addition to treasury bills.

However, as of September 2017, the nation’s debt had risen to N20 trillion.

Continuing, it noted that in 2017, the monetary policy committee of the Central Bank of Nigeria maintained monetary policy rate to keep inflation in check.