Bleep the Economy

0monnak0da:
Stop kidding yourself. You suggested that foreign reserves could be used to plug any shortfall in the budget and that is what I needed to correct.

The Foreign reserves are not available to be spent by the Government

In fact the dollars in the foreign reserves would have come about mainly from oil by the Government exchanging dollars for Naira with the CBN and then sharing the Naira.

So the government cannot spend those same dollars twice. They are now CBN assets

FOREIGN RESERVES HAS NOTHING to do with discussion about budget
Foreign reserves are not savings so the word "reserve" should not mislead any one

this guy, ur a joker

jumper524:
this guy, ur a joker

Yes you are a sardine

Back to topic

What has foreign reserve got to do with budget?
What is the nexus?

Pls guys help me out this our government na scam I don't understand them what is 1 US Dollar to Naria again pls

jumper524:
you only made a mockery of your self here by thinking your intelligent.. the foreign reserve has multiple purpose including the maintenance of a country's currency. its only natural our currency losses it's value when our crude export rate goes down. a good reserve would do well in managing the currency in such situations.

and also note that the country can survive for years with positive reserve.

That man was correct, foreign reserves isn't for spending. Foreign reserves can't be used to execute government's expenditure. Foreign reserves is merely for monetary purposes and not fiscal.

A good foreign reserve will not do anything to help your currency situation when things go wrong (which is a fiscal policy in itself and not a monetary one).

Also foreign reserves (like in Nigeria's case) are mostly used made up for bonds and treasury bills sold by the CBN on behalf of the government. In other words, a large chunk of your reserves are technically debts because in theory a government has to pay back the bills and bonds.

I think you're mistaken Excess Crude Account for Foreign Reserves.

If your economy is in turmoil and you think spending out of your foreign reserves will make things better, you're just brewing a recipe for disaster.

If you need further clarification of what Nigeria's foreign reserves is made up of (and basically why it can't be "spent" in theory), read this report by Guardian newspaper.

https://guardian.ng/business-services/whats-inside-nigerias-foreign-reserves/amp/?__twitter_impression=true