IS NIGERIA'S DEBT SUSTAINABLE?
I have pressing questions that pertains to the sustainability of Nigeria's debt.
While I research them out, I would like you guys to have a glimpse of them.
(1) How does Nigeria's domestic and Foreign debt stock impact on her sustainability.
(2) When does one know that a State is heading for a debt trap; what are the indications?
(3) How does the Eurozone recession, the slowing down of the emerging markets of the Asian-Pacific and snail-speed recovery of the U.S from her own recession impact on the price of crude oil in the Int'l market (as Nigeria is a leading African participant in petroleum trade; and on petroleum lies her mainstay)?
(4) How does the above issues affect the Nigerian Economy?
The reasons for these questions are these;
The FG of Nigeria makes serious plans to borrow loans summing up to $7.9bn from the World Bank, the Islamic Development Bank and sundry financial institutions.
Now let me take you back memory lane;
Nigeria was granted debt relief in 2005 under the administration of Chief Olusegun Obasanjo, and a year later, under the same administration, the country's debt stood at $17.34bn. This figure comprised the country's entire debt stock (local and foreign debt).
But as of March 2012, the Debt Management Office states the Country's debt profile reads $44bn.
According to the Federal Ministry of Finance, of this $44bn, $38.3bn is local while $5.9bn is foreign.
Since the F.G intends to borrow $7.9bn, our foreign debt will rise to $13.8bn, taking our total debt profile to $51.9bn.
Our National Govt. borrows such amounts of monies yet it hardly reflects in our Micro-economics. And this translates into the fact that it is not channeled in to the productive aspect of our economy, to justify the borrowing!
The Debt Management Office and the Fed. Min. of Finance are basking on the figure of 40% (given them by the International Monetary Fund) which reflects the ratio of the country's external debt to her GDP, thus describing the idea of borrowing as sustainable in this instance.
But my fear is that the Debt Mgt Office and Min. of Finance is not facing the issues some of us seem to raise.
Our "eligibility" for taking debt (as assured by the IMF) is secondary when compared to what the money will actually be used for.
Will this $7.9bn be used to cub the unemployment scourge (which is growing in geometric progression) or will it be used to finance inflated contracts? Will this money be used to diversify our mainstay or will it be used to bribe party delegates during Party primaries? Will this money be used to provide quality education at all levels or will it be used to finance elephant projects? Will this $7.9bn be used to provide portable water and health care services (especially in the hinterlands) or will it be shared and kept for the election day, when it will be used to buy the votes of the poor and hungry masses?
President Goodluck Jonathan, Debt Management Office and Ministry of Finance this questions are for you!
Senator David Mark and Rt. Hon. Aminu Tambuwal do you assure Nigerians of the judicious use of this money to better the lot of your fellow countrymen rather than the above mentioned possible means of misuse?
You are active guardians of the Nigerian Society today so I advice that you act appropriately now that it is yet day.
Furthermore, the lingering debt crisis in the Eurozone, the slowing emerging markets of the Asian-pacific and the snail-speed recovery of the U.S from recession are endangering the global economy to a widespread recession and this will definitely jeopardize crude oil prices in the Int'l market.
It is common knowledge that crude oil is the mainstay of the Nigerian Economy, in that, almost all Govt. expenditure is gotten from crude oil trade proceeds.
In the midst of these upheavals what is the F.G of Nigeria doing to cushion the country from a possible recession which requires no soothsayer's prediction to know how severe it will deal on the Nigerian economy especially as it has to do with the main object of trade in the Int'l market, crude oil.
My advice, therefore is that all this money be pushed into productive sectors of our Country's economy viz Labour and productivity, Education, Trade and investments, Communications and Agriculture. Additionally the F.G should protect this money from wolves who have ravaged debts of yesteryears.
I'm hopeful that if this is done our country will be better.
While I research them out, I would like you guys to have a glimpse of them.
(1) How does Nigeria's domestic and Foreign debt stock impact on her sustainability.
(2) When does one know that a State is heading for a debt trap; what are the indications?
(3) How does the Eurozone recession, the slowing down of the emerging markets of the Asian-Pacific and snail-speed recovery of the U.S from her own recession impact on the price of crude oil in the Int'l market (as Nigeria is a leading African participant in petroleum trade; and on petroleum lies her mainstay)?
(4) How does the above issues affect the Nigerian Economy?
The reasons for these questions are these;
The FG of Nigeria makes serious plans to borrow loans summing up to $7.9bn from the World Bank, the Islamic Development Bank and sundry financial institutions.
Now let me take you back memory lane;
Nigeria was granted debt relief in 2005 under the administration of Chief Olusegun Obasanjo, and a year later, under the same administration, the country's debt stood at $17.34bn. This figure comprised the country's entire debt stock (local and foreign debt).
But as of March 2012, the Debt Management Office states the Country's debt profile reads $44bn.
According to the Federal Ministry of Finance, of this $44bn, $38.3bn is local while $5.9bn is foreign.
Since the F.G intends to borrow $7.9bn, our foreign debt will rise to $13.8bn, taking our total debt profile to $51.9bn.
Our National Govt. borrows such amounts of monies yet it hardly reflects in our Micro-economics. And this translates into the fact that it is not channeled in to the productive aspect of our economy, to justify the borrowing!
The Debt Management Office and the Fed. Min. of Finance are basking on the figure of 40% (given them by the International Monetary Fund) which reflects the ratio of the country's external debt to her GDP, thus describing the idea of borrowing as sustainable in this instance.
But my fear is that the Debt Mgt Office and Min. of Finance is not facing the issues some of us seem to raise.
Our "eligibility" for taking debt (as assured by the IMF) is secondary when compared to what the money will actually be used for.
Will this $7.9bn be used to cub the unemployment scourge (which is growing in geometric progression) or will it be used to finance inflated contracts? Will this money be used to diversify our mainstay or will it be used to bribe party delegates during Party primaries? Will this money be used to provide quality education at all levels or will it be used to finance elephant projects? Will this $7.9bn be used to provide portable water and health care services (especially in the hinterlands) or will it be shared and kept for the election day, when it will be used to buy the votes of the poor and hungry masses?
President Goodluck Jonathan, Debt Management Office and Ministry of Finance this questions are for you!
Senator David Mark and Rt. Hon. Aminu Tambuwal do you assure Nigerians of the judicious use of this money to better the lot of your fellow countrymen rather than the above mentioned possible means of misuse?
You are active guardians of the Nigerian Society today so I advice that you act appropriately now that it is yet day.
Furthermore, the lingering debt crisis in the Eurozone, the slowing emerging markets of the Asian-pacific and the snail-speed recovery of the U.S from recession are endangering the global economy to a widespread recession and this will definitely jeopardize crude oil prices in the Int'l market.
It is common knowledge that crude oil is the mainstay of the Nigerian Economy, in that, almost all Govt. expenditure is gotten from crude oil trade proceeds.
In the midst of these upheavals what is the F.G of Nigeria doing to cushion the country from a possible recession which requires no soothsayer's prediction to know how severe it will deal on the Nigerian economy especially as it has to do with the main object of trade in the Int'l market, crude oil.
My advice, therefore is that all this money be pushed into productive sectors of our Country's economy viz Labour and productivity, Education, Trade and investments, Communications and Agriculture. Additionally the F.G should protect this money from wolves who have ravaged debts of yesteryears.
I'm hopeful that if this is done our country will be better.
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