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N2.2trn Budget Deficit Can Be Financed Via Capital Market – NSE boss

N2.2trn Budget Deficit Can Be Financed Via Capital Market – NSE boss

2016 Budget presentation

The Chief Executive of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, has said that the outstanding federal government N2.2 trillion budget deficits could be effectively financed through the instruments in the capital market. He stated this while appraising the performance of the stock market in 2015 and making projections for 2016, saying: “The capital market has an opportunity to effectively finance the FGN’s proposed budget deficit for 2016 and the implementation of its Medium Term Expenditure Framework (MTEF).”

He emphasized that the stock exchange exists to provide a platform for financing the economy from equity and fixed income perspective and other asset class perspective, adding that the NSE will focus on executing its strategy in order to continue to provide a credible platform for financing the economy.

“To this end, we intend to intensify engagement efforts with the federal government. We have also prioritized three initiatives for 2016 aimed at achieving the Exchange’s three strategic objectives of increasing the number of new listings across five asset classes; increasing order flow in the five asset classes; and operating a fair and orderly market based on just and equitable principles,” he affirmed.

“We are trying to position ourselves to be a credible platform for financing the economy. And so, given that we are frontier market, the government typically will have an inordinate influence on the economic activities and so putting ourselves in a position to be a platform to finance government deficit, for instance is something that we certainly will like to do,” he observed.

Moving along in the New Year, he said that the NSE would ensure that state-owned enterprises that are supposed to be listed are brought to the market to unlock liquidity for the government. “So we want to continue to help to finance economic activities both from the private sector side and public sector side.”

Reviewing the macro-economic activities in the past year, the NSE chief said: “Like many emerging markets’ governments, the Federal Government of Nigeria (FGN) is largely dependent on oil exports as its leading revenue source. Thus FGN revenue suffered extensively from sustained low commodities prices in the global market, as well as political and economic policy uncertainty leading up to and following the general elections held in April 2015.

“Sustained uncertainty in the country led to postponed decision making by business leaders in anticipation of clearer direction on economic policies, thus slowing economic activity.

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