President Barack Obama and visiting Brazilian President Dilma Rousseff on Monday stressed the importance of strong ties between their countries, despite Brazil’s concerns about United States economic policies that it says can work against emerging economies, reports the CNN.
In comments to reporters after a White House meeting, Obama and Rousseff highlighted the areas of cooperation on energy development, education and trade as the two leaders prepare to attend the upcoming Summit of the Americas in Cartagena, Colombia, beginning Friday.
However, they made no mention of less collaborative topics, such as whether each country will purchase new military aircraft from the other, or whether the United States will support Brazil’s efforts to gain a seat at the U.N. Security Council.
Two-way trade between Brazil and the United States last year totaled around $74 billion, according to the U.S. Census Bureau, and the balance has gone from a U.S. deficit to a surplus in recent years.
Brazil has recently announced a series of measures to boost economic growth and rein in its overvalued currency, including slashing interest rates and levying taxes on short-term currency inflows.
At the same time, Brazil complains that low U.S. interest rates amid a sluggish recovery are hurting foreign trade partners.
On Monday, Rousseff and her foreign affairs minister both noted the U.S. trade surplus with Brazil, and Rousseff called for better balance in U.S. monetary and fiscal policies to prevent a depreciation of the dollar that harms emerging market trade partners.
Expansionist monetary policies, such as holding down interest rates, in isolation of fiscal expansion through increased investments, “ultimately lead to depreciation in the value of the currencies of developed countries, thus impairing growth outlooks in emerging countries,” Rousseff said.
Earlier, in comments to U.S. business leaders, Foreign Minister Antonio de Agular Patriota cited increased trade between the countries despite the global economic downturn of recent years, but he also called the Brazilian trade deficit with the United States “not ideal” and “a challenge.”
In particular, he said the United States now buys more Brazilian commodities and fewer of his country’s manufactured goods, adding, “this is something we have to look at very seriously, and we will.”
In her comments, Rousseff noted that the global economy’s “resumption of growth in the medium-term future certainly involves a substantial resumption of growth in the U.S. economy.”
“We very much welcome the major improvements that have been found in the U.S. economy in the recent past, and I am quite certain that that will very much be the emphasis in the next few months and years ahead under the capable leadership of President Obama,” she added in what amounted to either an endorsement or prediction of Obama’s re-election in November.
It is Rousseff’s first official visit to Washington as Brazilian president and comes more than a year after Obama went to Brazil, shortly after Rousseff came to power in the South American country.
In his own remarks to reporters, Obama emphasized Brazil’s rising influence in global affairs as a South American power that has become the world’s sixth-largest economy.
He cited “the extraordinary progress that Brazil has made” to become “not only a leading voice in the region, but also a leading voice in the world.”
In particular, Obama noted Brazil’s growing energy development and its growth into a leader in the biofuel industry as well as a major player in oil and gas development.
“The United States is not only a potential large customer to Brazil, but we think that we can cooperate closely on a whole range of energy projects together,” Obama said at a time when he is under attack from Republicans over rising domestic gas prices.
Speaking through a translator, Rousseff agreed that oil and gas development offered “a tremendous opportunity for further cooperation, both as regards the supply of equipment and provision of services, and also as regards a wider role in our trade relations.”
Lawmakers Want CBN To Halt Naira Devaluation
The House of Representatives has asked the Central Bank of Nigeria (CBN), to urgently put in place a policy to check further devaluation of the naira to the United States dollar and other international legal tenders.
The House decried that while the Nigerian currency was losing value, others in Africa were appreciating.
At the plenary on Wednesday, the House unanimously adopted a motion moved by the Deputy Chairman of the Committee on Pensions, Mr Bamidele Salam, which warned the CBN of the implications of further devaluing the naira.
The motion was titled, ‘Matter of urgent public importance on the need for the Central Bank of Nigeria to urgently put in place monetary policies to stop the free fall of the naira against the dollar and other international legal tenders’.
Salam recalled that the CBN governor, Godwin Emefiele, while addressing the Bankers’ Committee at a summit on the economy in Lagos earlier in February, informed the committee about the naira devaluation against the dollar.
The lawmaker also quoted Emefiele as saying at the summit that the official exchange rate stood at N410 to the dollar.
“That is 7.6 per cent weaker than the rate of N379 published on the central bank’s website,” Salam noted.
According to the lawmaker, while the value of the naira relative to the dollar had declined by nine per cent in the last six months, the South African rand and Ghanaian cedi had appreciated by 11.4 per cent and one per cent, respectively.
Salam also recalled that the CBN adopted multiple exchange rates in 2020, in a bid to avoid an outright devaluation.
He noted that the official rate used as a basis for budget preparation and other official transactions differed from a closely controlled exchange rate for investors and exporters known as the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology.
He stressed that the naira had traded in a tight range between N400 and N410, while the NAFEX rate was different from the parallel market, considered illegal by the CBN, where the naira closed at 502.
Salam said, “The House is concerned that devaluation is likely to cause inflation because imports will be more expensive any imported goods or raw material will increase in price; aggregate demand increases, causing demand-pull inflation. Firms/exporters have less incentive to cut costs because they can rely on the devaluation to improve competitiveness.
”The concern is that the long-term devaluation may lead to lower productivity because of the decline in incentives.
”The House is further concerned that devaluation of the naira makes it more difficult for Nigerian youths especially in the IT sector, whose businesses are online and must necessarily transact businesses in the US dollars.
“It also reduces real wages. In a period of low wage growth, a devaluation that causes rising import prices will make consumers feel worse off “.
Four West African Countries To Buy Nigeria’s Unutilised Electricity
Four West African countries, Niger, Togo, Benin and Burkina Faso, are collaborating to buy the unutilised power produced in Nigeria.
The Chairman of the Executive Board of the West African Power Pool (WAPP), Sule Abdulaziz, disclosed this at the WAPP meeting on the North core project in Abuja, on Wednesday.
Abdulaziz, who is also the acting Managing Director of the Transmission Company of Nigeria (TCN), said the four countries were collaborating to make the power purchase from Nigeria through the North core Power Transmission Line currently being built.
He explained, “The power we will be selling is the power that is not needed in Nigeria.
“The electricity generators that are going to supply power to this transmission line are going to generate that power specifically for this project. So, it is unutilised power”.
He said Nigeria was expecting new generators to participate in the energy export for the 875km 330KV Northcore transmission line from Nigeria through Niger, Togo, Benin to Burkina Faso.
Abdulaziz said, “In addition, there are some communities that are under the line route, about 611 of them, which will be getting power so that there won’t be just a transmission line passing without impact”.
The WAPP chairman noted that the project, funded by World Bank, French Development Council and the African Development Bank, had recorded progress, adding that the energy ministers would be addressing security issues for the project at another meeting in Abuja.
He said, “Nigeria has the greatest advantage among these countries because the electricity is going to be exported from Nigerian Gencos (generation companies).
“So, from that, the revenue is going to be enhanced and a lot of people will be employed in Nigeria”.
The Secretary-General, WAPP, Siengui Appolinaire-Ki, said the cost of the project was about $570 million, adding that part of the investment in each country would be funded by that particular nation.
According to him, the countries in the partnership, including Nigeria, are also being supported by donors.
He said the funding agreement was ready as partner countries were awaiting the disbursements.
Appolinaire-Ki, however, said the donor agencies had said they needed a Power Purchase Agreement between the buying and the selling countries to be executed before releasing the fund.
Reps Probe N275bn Agric Loans Under Yar’Adua, Jonathan, Buhari
The House of Representatives has resolved to investigate the disbursement of loans and credit facilities by the Federal Government in the agriculture sector since 2009.
The period under review covers the administrations of the late Umaru Yar’Adua, Goodluck Jonathan as well as the present President, Muhammadu Buhari.
The resolution was sequel to the unanimous adoption of a motion moved by Hon. Chike Okafor at the plenary last Wednesday, titled ‘Need to investigate disbursements of all agricultural loans/credit facilities to farmers from 2009 to date to enhance national food security’.
Okafor said, from 2009 to date, the Federal Government had approved the disbursement of funds to farmers in various schemes to the tune of over N275billion, ranging from Commercial Agricultural Credit Scheme to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending, to help farmers improve agricultural production and guarantee food security in Nigeria.
The lawmaker also noted that apart from increasing food supply, the schemes were to grant agricultural loans to large and small-scale commercial farmers to lower the prices of agricultural produce, generate employment and increase foreign exchange earnings.
He said, “The House is aware that since the approval, most farmers have not been able to access the loans due to stringent requirements being demanded by banks from prospective borrowers and the alleged siphoning of over N105billion meant for farmers by management of NIRSAL.
“The House is concerned that food production has not attained the expected level, despite the approval of over N275billion facilities to farmers.
“The House is worried that the projected diversification of the economy from oil production to agricultural production and increase in agricultural output, food supply and promoting low food inflation will not be achieved if farmers are unable to access loans meant to increase agricultural production”.
Adopting the motion, the House resolved to mandate the Committee on Banking and Currency to “investigate disbursements and compliance of all agricultural loans/credit facilities to farmers from 2009 to date to enhance national food security in the country”.
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