Crude oil price hits $65.85 per barrel after OPEC, Non-OPEC meeting

By Rosemary Iwunze

As the price of crude oil in the international market continues to rise, hitting over $88 per barrel last week against $62 of the budget benchmark, the Federal Government has been asked to consider using the surplus to either reduce the budget deficit or use it to build infrastructure.

Chief Consultant at B. Adedipe Associates Limited, Dr. Biodun Adedipe, who took this position last week, noted that government should also be responsible to its insurance needs.

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Speaking at a media parley with insurance journalists in Lagos, sponsored by Boof Insurance Brokers Limited and B. Adedipe Associates Limited, Adedipe said: “The price of crude has been favourable to us.   It is either you use the gain to reduce the deficit, or alternatively, you use that gain to build infrastructure, which ultimately will also increase government revenue.”

He also warned that the forthcoming election could create liquidity pressures in the economy as there will be too much money in circulation.

“In pre election years, politicians spend a lot of money and that creates liquidity pressure. You have so much money circulating and that stands to put pressure on prices, so it will be expected this year that there’s will be inflationary pressure.”

Adedipe also decried the high volume of imports against exports in the country. Speaking on the insurance sector, Adedipe said: “For the insurance sector to grow, government need also to be

 responsible to its insurance obligations which talks about paying premium. There also must be need for flexibility and also ensuring that compulsory insurance is enforced because enforcement had always been an issue.

“If the government is responsible and put a lot of fervour into enforcement, then what we have today as compulsory insurance we can actually create more value from. And when insurance sector is vibrant, it will galvanize businesses and individuals to take risk and that is how economies grow.

“The freedom to take risk is on the back of a vibrant insurance sector, so the conversation should be how do we make that sector vibrant and that brings us to involve more interactions between government agencies and the insurance sector, so that all the stakeholders constantly are engaging and so whatever is needed to be done to make us deepen insurance, the government will keep making that happen.”

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