ELTON123:
Ok

Galacious1:
Does this reduce d price of fuel?


#teamftc

egift:
Thank God the onslaught on the Economy by Jonathan and his crew was stopped. OBJ left a clean slate. Yar'Adua resisted borrowing extravagantly. But Jonathan want piling it up like no tomorrow.

grandstar:
I have always maintained that the country's debt ratio was very low.

The nation's total debt is $60b including local and international. The GDP is $500b giving a debt ratio of 12%

The budget deficit too is impressively low .

During this period of economic downturn, the deficit is not even up to 2% of GDP! Its quite impressive.

Whats shocking is the lending rates! Nigeria with its sparkling fiscal finances should have lending rates in low single digits. Alas, Nigerians borrow at double digits and underlying inflation high.

Government needs to urgently dollarize the monthly allocations to the three tiers of governments that were generated from oil exports to end this absurdity.

grandstar:
I have always maintained that the country's debt ratio was very low.

The nation's total debt is $60b including local and international. The GDP is $500b giving a debt ratio of 12%

The budget deficit too is impressively low .

During this period of economic downturn, the deficit is not even up to 2% of GDP! Its quite impressive.

Whats shocking is the lending rates! Nigeria with its sparkling fiscal finances should have lending rates in low single digits. Alas, Nigerians borrow at double digits and underlying inflation high.

Government needs to urgently dollarize the monthly allocations to the three tiers of governments that were generated from oil exports to end this absurdity.

dmyke:
Buhari said in the US that Nigeria has the greatest economy in Africa. Nobody batted an eyelid. When NOI rebased the economy and our economy became became larger than that of South Africa, many people wanted to crucify her for "telling lies".

LordVarys:

Exactly

TheImp:
GEJ left a well structured debt management system, yet the dolts in APC accused him of leaving behind massive debt..
Cc lalasticlala

TheImp:

I would be refrain from insulting you since you may have been uninformed, FYI the bulk of the borrowing and ECA account depletion occurred under Yar’Adua during the 2008/2009 economic crisis when global oil prices fell from $140 to $40 during the recession.
The Yar’Adua govt had to borrow massively to supplement the budget and also depleted the ECA.
The hate you guys have for GEJ has prevented you from reasoning objectively.
Under GEJ, Nigeria barely borrowed and was said to be under utilising it's capacity to obtain funding...thats how cautious NOI was.


This is NOI's legacy, she secured debt relief and has ensured Nigeria remains largely the most external debt free nation on the continent , She left an economy growing constantly at 7% for the past decade yet you guys vilified her. There's a reason she's so well respected internationally and by her peers in Africa so much that her strong backing of Adesina for the Afdb presidency was able to get most African Finance ministers to sign up for his candidacy
The Greek economy collapsed after debt to GDP ratios reached extraordinary levels of 140%

Activa:


I have 4 questions for you:

1. How can debt to gdp ratio be a sensible basis for borrowing when the govt doesn't have access to all of national income (gdp)? Why can't debts be expressed as a ratio of the income that govt has access to?

2. You talked about high lending rates in naija. Why do you think it's so? Why are u not talking about the inflation rate and factors responsible for it?

3. You said allocation should be paid to the states, LGs and FG in dollars in order to end the absurdity. What will they do with the dollars since naira is our legal tender?

4. You said the fiscal finance in nigeria is sparkling because deficit is small again when related to GDP. What percentage of the budget goes into recurrent expenditure? With the size of our gdp, what should be a decent annual budget and external reserves?

Activa:


I have 4 questions for you:

1. How can debt to gdp ratio be a sensible basis for borrowing when the govt doesn't have access to all of national income (gdp)? Why can't debts be expressed as a ratio of the income that govt has access to?

TheImp:

I would be refrain from insulting you since you may have been uninformed, FYI the bulk of the borrowing and ECA account depletion occurred under Yar’Adua during the 2008/2009 economic crisis when global oil prices fell from $140 to $40 during the recession.
The Yar’Adua govt had to borrow massively to supplement the budget and also depleted the ECA.
The hate you guys have for GEJ has prevented you from reasoning objectively.
Under GEJ, Nigeria barely borrowed and was said to be under utilising it's capacity to obtain funding...thats how cautious NOI was.


This is NOI's legacy, she secured debt relief and has ensured Nigeria remains largely the most external debt free nation on the continent , She left an economy growing constantly at 7% for the past decade yet you guys vilified her. There's a reason she's so well respected internationally and by her peers in Africa so much that her strong backing of Adesina for the Afdb presidency was able to get most African Finance ministers to sign up for his candidacy
The Greek economy collapsed after debt to GDP ratios reached extraordinary levels of 140%

grandstar:


Based on what you said, the GDP figures may actually be bigger. The figures are for recorded GDP. The informal economy in Nigeria is huge and if added , may increase the size to about $700b.

Using income as a measure, it isn't that pretty.

Tax take as a % of GDP was a measly 6.1% which is one of the lowest in the world. Ghana's is 20.8%

Since debt is 12% of GDP, it does not seem so good.

And again, debt servicing gulps about 20% of the budget. This can easily plummet if interest rates decline to single digits.



2. You talked about high lending rates in naija. Why do you think it's so? Why are u not talking about the inflation rate and factors responsible for it? Or don't u think inflation rate plays a role in interest rates?

Inflation does play a might role. It's very important that real interest rates are always positive.

Nevertheless, why is inflation high if the deficit is barely 2% of GDP.

It is because the crude oil receipts earned in dollars are disbursed monthly to the 3 tiers in naira.

This substitution inflates the money supply and it's the major reason for the perennial excess money in circulation and strong inflationary pressures.

The CBN in order to bring inflation down, tightens monetary policy by increasing the MPR which affects lending rates across board.

Soludo tried dollarising by using dollar certificates but the governors unused to it cried out to Yar'Adua who had it cancelled.


3. You said allocation should be paid to the states, LGs and FG in dollars in order to end the absurdity. What will they do with the dollars since naira is our legal tender?

It is not actually dollars but dollars certificates.



4. You said the fiscal finance in nigeria is sparkling because deficit is small, again when related to GDP. What percentage of the budget goes into recurrent expenditure? With the size of our gdp, what should be a decent annual budget and external reserves?

It's sparkling relative to other countries.

Th percentage that goes to recurrent is high. This can easily be trimmed if the civil service is trimmed down and the petrol subsidy removed. The 2 alone problem will yield anywhere from 1.2 to 2 trillion in saving.

Most importantly, the % tax take must increase. This won't be easy as tax evasion is a national pastime.

If the tax take could increase by 2% of GDP, that would net the country 2 trillion in extra income.

The government spending at around 4.5 trillion is pitiful. This is just 4.5% of gdp. It can be double that but with justification.

Hong Kong which has a zero % import duty on goods, 15% income tax and 16.5% company tax and no VAT whatsoever collects 13% of GDP.
Despite this, it has the best infrastructure in the world, second place is Germany. It also has a very high per capita income.

The foreign exchange reserve should be about $100b.

Its low because of the naira substitution policy. If removed, the excess money will end and the interest rates will collapse to single digits.
This will spur investments in the manufacturing, mining, tourism and agricultural sector which will eventually lead to increased exports.

CONCLUSION

If you were a finance minister which country would you like to manage: A country with a debt ratio of 12% and deficit of 2% or a debt ratio of a 100% and deficits of 6% of GDP?

Which of these 2 can easily be improved on? Which of these 2 has a better starting point? Which of these 2 would find it easier balancing the budget either through tax increases or spending cuts?

It's from this scenario that I am giving praise