₦airaland Forum

After years of bitter court battles with creditors, Argentina has defaulted on its debt, according to rating agency Standard & Poor’s. After failing to come to an agreement with creditors from its previous default in 2001, the country missed necessary bond payments on July 31, triggering the default announcement. As of publication, other organizations, most notably the rating agency Moody’s Investors Service and the International Swaps and Derivatives Association, a derivatives trade group, have yet to release public statements confirming the default.

Argentina is not the only country that has struggled, or even failed, to pay its debt in recent years. It is hardly the only country with a severely impaired credit rating either. Alongside Argentina, Moody’s currently lists 10 other countries with a rating of Caa1 or worse. A Caa1 rating is several notches below Ba1, which still carries substantial credit risk. Based on ratings from Moody’s Investors Service, these are the 11 countries at risk of default.



The countries with the lowest credit ratings significantly differ from one another. They span the globe, ranging from Greece and Ukraine in Europe, to Pakistan in Asia, to Ecuador, Venezuela, and Belize in South America.

These nations also suffer from vastly different problems. Some nations, such as Ukraine and Egypt, owe their recent downgrades to political conditions. Others, such as Belize and Ecuador, have actually been upgraded in recent years based on their improved financial positions.

When a government has a great deal of debt relative to the size of its economy, its credit rating may also be lower. Three of the nations potentially at risk of default had among the world’s highest debt levels, at 120% of GDP or more based on 2014 estimates. According to the International Monetary Fund (IMF), Greece’s debt is projected to hit nearly 175% of GDP by the end of this year, more than that of any other nation in the world except for Japan.

However, not all countries with low ratings necessarily have a large amount of outstanding government debt. For example, Ecuador’s government debt, according to the IMF, was forecast to total just 24.8% of GDP in 2014 -- an exceptionally low amount. In many cases, these countries simply do not regularly access international bond markets, either because of small financial sectors or because of debt-restructuring agreements.

Borrowing funds in the international bond market can be quite expensive for countries with poor credit ratings. Countries have to pay high interest rates on their debt because because investors require greater returns on what they perceive to be riskier investments. For example, a 10-year U.S. Treasury Note pays an annual coupon of just 2.5%. By contrast, a comparable bond recently issued by Jamaica pays out 7.65% a year. In Greece, yields on 10-year government bonds reached 29% in early 2012, right before the country defaulted.

Often, countries that tap into international bond markets do so in other currencies. For example, nations such as Argentina, Jamaica, Belize, and Ukraine have all issued bonds in other nations’ currencies. The main reason to use common currencies -- such as the dollar, yen, and euro -- is that their inflation rates are typically far lower than the currencies of the issuing countries. This means that investors do not need to worry as much about their investment losing value.

In fact, inflation is a major problem in several of the countries with the worst credit ratings. In one such nation, Venezuela, inflation is expected to exceed 50% in 2014, according to the IMF. Argentina's inflation rates are likely much higher than reported by government statistics on consumer prices, which were long considered highly unreliable.



Based on credit ratings provided by Moody’s Investors Service, 24/7 Wall St. reviewed the 11 countries with credit ratings of Caa1 or worse. A rating of this level indicates considerable credit risk. Because many of these nations have significant debt in other currencies or have otherwise weak currencies, we used foreign currency ratings and outlooks for these nations. Figures on GDP growth, inflation, unemployment, population and debt levels are estimates for 2014 from the IMF’s World Economic Outlook.

These are the 11 countries at risk of default.

Ecuador
> Moody’s credit rating: Caa1
> Moody’s outlook: Stable
> 2014 Gov’t debt (pct. of GDP): 24.8%
> 2014 GDP per capita (PPP): $10,492

Argentina's tumble into defaultPlay VideoArgentina's tumble into default
When Ecuador last defaulted in 2008, President Rafael Correa described the nation’s debt as “immoral” and “illegitimate.” The country's past debt sales had been tainted by corruption, Correa said at the time. Since 2008, Ecuador’s Moody’s credit rating has steadily risen, reaching Caa1 in 2012. Earlier this year, the country both bought back a substantial fraction of its defaulted debt and issued new bonds for the first time since its previous default. According to figures from the IMF, Ecuador's economic growth has been relatively healthy in recent years. GDP grew by 5.1% in 2012 and by an estimated 4.2% last year. GDP is forecast to rise by 4.2% again in 2014.

Egypt
> Moody’s credit rating: Caa1
> Moody’s outlook: Negative
> 2014 Gov’t debt (pct. of GDP): 91.3%
> 2014 GDP per capita (PPP): $6,696

Political unrest in Egypt in recent years has made investors wary, leading Moody’s to downgrade Egyptian debt to Caa1 in March 2013. Fears were further compounded by currency devaluation as Egyptians moved their assets into U.S. dollars and out of Egyptian pounds. But despite the country’s low credit rating, yields on Egyptian bonds fell below 5% in June. This may be an indication that investors are less concerned about the risk of political instability in the country. And while its outlook remains negative, Moody’s recently praised Egyptian President Abdel Fattah el-Sisi’s commitment to reduce the government’s budget deficit in the fiscal year starting on July 1, 2014.

Pakistan
> Moody’s credit rating: Caa1
> Moody’s outlook: Stable
> 2014 Gov’t debt (pct. of GDP): 63.7%
> 2014 GDP per capita (PPP): $3,231

This April, Pakistan issued its first bond in seven years, raising roughly $2 billion in dollar-denominated debt. Pakistan has a multi-billion dollar line of credit with the IMF, but loans are conditional on the country enacting structural reforms to its economy. Pakistan was at risk of default last year until the IMF agreed to lend it money. Tax collection remains a major problem in the country. According to The Express Tribune, only roughly one in 200 citizens even files an income tax return. The country’s total debt amounts to roughly 64% of its annual GDP, even as government spending for 2014 is estimated to be among the world’s lowest, at roughly 20% of GDP.



Venezuela
> Moody’s credit rating: Caa1
> Moody’s outlook: Negative
> 2014 Gov’t debt (pct. of GDP): 51.6%
> 2014 GDP per capita (PPP): $13,531

Venezuela’s need for short term cash may lead to trouble in future years. President Nicolas Maduro’s administration plans to issue bonds through the state-owned oil company, Petroleos de Venezuela, to increase the availability of foreign currency in the country. More foreign currency may help tame inflation in Venezuela, which stood at 40.7% in 2013. However, according to Bloomberg, the rate at which the oil company is taking on debt will likely outpace oil revenues in the coming years, making it increasingly difficult to make future loan payments. Venezuela is expected to spend less than 2% of GDP on interest payments in 2014, a number that is likely to balloon if the country continues to rapidly issue debt. Venezuela also has the highest 10-year bond yields in the Western Hemisphere at 15.81% as of June 2014.

Argentina
> Moody’s credit rating: Caa1
> Moody’s outlook: Stable
> 2014 Gov’t debt (pct. of GDP): 52.9%
> 2014 GDP per capita (PPP): $18,917

Argentina’s current problems can be tied back to 2001, when the nation defaulted on about $100 billion worth of debt. While most of the nation’s bondholders at the time agreed to restructure their debt, a few investors refused. After a U.S. court ruled in 2012 that Argentina should not pay its current bondholders without paying the holdouts as well, the country has faced the prospect of yet another default. On July 30, Standard & Poor’s stated that Argentina had defaulted. Other relevant financial bodies, such as the International Swaps & Derivatives Association, are also expected to declare Argentina has defaulted. Argentina has been beset by economic problems for years. Inflation was widely-believed to be well in excess of the government’s reported rates, and Argentina has deliberately devalued its currency, the peso.

Belize
> Moody’s credit rating: Caa2
> Moody’s outlook: Stable
> 2014 Gov’t debt (pct. of GDP): 80.4%
> 2014 GDP per capita (PPP): $8,915

Belize is a tiny Latin American nation with a population of less than half a million residents. The country has suffered from debt problems for years, first defaulting nearly a decade ago, after which it consolidated all of its international debts into a single bond. The country missed a payment on this “superbond” in August 2012, leading to a 2013 debt restructuring that resulted in a longer repayment time, a haircut to the bond’s overall value, and smaller payments for bondholders. Following the restructuring, Moody’s upgraded Belize’s credit rating to Caa2 with a stable outlook. The IMF projects that Belize’s total gross debt will reach 80.4% of GDP by the end of 2014.



Cuba
> Moody’s credit rating: Caa2
> Moody’s outlook: Stable
> 2014 Gov’t debt (pct. of GDP): N/A
> 2014 GDP per capita (PPP): N/A

In April, Moody’s downgraded Cuba's credit rating to Caa2 with a stable outlook. Weaknesses cited by Moody’s at the time included “limited access to external financing, high dependence on imported goods, political transition risk, and lack of data transparency.” Recently, Russia announced it had written off most of Cuba’s debt, significantly cutting the country’s obligations. Cuba does not pay interest on its debt and its bonds are rarely traded. The IMF does not collect figures for Cuba, which is not a member of the IMF and World Bank.

Cyprus
> Moody’s credit rating: Caa3
> Moody’s outlook: Positive
> 2014 Gov’t debt (pct. of GDP): 121.5%
> 2014 GDP per capita (PPP): $24,171

In March of last year, Cyprus received a 10 billion euro loan from the IMF, the European Central Bank, and the European Commission to save its banking system from bankruptcy. Just over a year later, Cyrus returned to global debt markets, raising $1 billion in five-year bonds yielding less than 5%. This was a moderate victory for the Mediterranean island country as its five-year bond yields neared 14% in prior years. Despite rating its bonds as Caa3, the lowest rating before default, Moody’s has a positive outlook on the country. The country’s improving economic performance, coupled with historically low interest rates in other eurozone countries, will likely push more adventurous investors towards Cyprus to take advantage of higher yields.

Greece
> Moody’s credit rating: Caa3
> Moody’s outlook: Stable
> 2014 Gov’t debt (pct. of GDP): 174.7%
> 2014 GDP per capita (PPP): $24,574

Once the poster child of economic calamity, Greece's efforts to restructure its debt and impose economic discipline are paying off. In April of this year, Greece returned to international bond markets after a four-year hiatus, raising nearly $4.2 billion in an oversubscribed issue of five-year bonds with a yield below 5%. According to Greece’s Finance Ministry, almost 90% of bonds were issued to investors outside of Greece, indicating that international investors are beginning to view Greek government bonds as a good investment. While this is good news, Greece still has more work to do. The country's unemployment rate remains above 26% and deflation currently threatens to further depress demand.


Jamaica
> Moody’s credit rating: Caa3
> Moody’s outlook: Positive
> 2014 Gov’t debt (pct. of GDP): 133.7%
> 2014 GDP per capita (PPP): $9,256

Jamaica re-entered the global bond market in July 2014 with a bang, raising $800 million, which was well above the $500 million expected by government officials. The expanded deal indicates that investors are excited about investment opportunities in Jamaica. The country’s improving economy may explain some investor exuberance. Despite slow growth and an unemployment rate that has been consistently above 11% since the global recession, Jamaica has reduced government expenditure as a share of GDP from 38.6% in 2009 to an estimated 26.9% this year. Additionally, the Jamaican government expects its budget deficit to be nearly balanced in 2014.

Ukraine
> Moody’s credit rating: Caa3
> Moody’s outlook: Negative
> 2014 Gov’t debt (pct. of GDP): N/A
> 2014 GDP per capita (PPP): N/A

Following the ouster of President Viktor Yanukovych in February, who was a close ally of Russian President Vladimir Putin, the political crisis in Ukraine has largely escalated. In March, Russia annexed the Ukrainian peninsula of Crimea in the Black Sea, from Ukraine. Violence between the government and pro-Russian separatists has also been rampant in eastern Ukraine. Financially, Ukraine’s relationship with Russia is also complex. Russia lent its neighbor $3 billion last December, when Yanukovych still ran the country. The bond deal contained a clause triggering automatic full repayment if Ukrainian government debt exceeded 60% of GDP, alongside other conditions that have worried several debt market experts. Due to the ongoing crisis, Moody’s downgraded Ukraine’s credit rating, and the IMF excluded projections for Ukraine from its most recent World Economic Outlook report.


http://finance.yahoo.com/news/11-countries-near-bankruptcy-223350842.html

which slowpoke revived this thread and why?

APC wonders why Nigerians see them as the political wing of boko haram. How can you people produce this kind of out right lie.

Nigeria plans to reduce taxes on telecommunications infrastructure to encourage companies to spend more on networks in Africa’s most populous country, Communications Technology Minister Omobola Johnson said.

“For every naira that is spent on infrastructure, about 70 percent of it is spent on taxes,” she said in an interview yesterday at her office in the capital, Abuja. “We’re going to bring that down to a much more reasonable level at 30 to 40 percent.”

Mobile-phone companies including Johannesburg-based MTN Group Ltd. (MTN) and Bharti Airtel Ltd. (BHARTI) of India have examined ways to offload networks to reduce exposure to costly African infrastructure. Apart from taxes, Nigeria operators also face the challenges of unreliable power supply and the threat of bomb attacks from Islamist militants. MTN, the Nigerian market leader, and Airtel were both fined earlier this year for poor service standards in the West African country.

While Nigerian laws allow only the federal government to tax mobile-phone companies, states and local authorities have found other ways to raise cash by heavily levying operators’ infrastructure, including towers and base stations, Johnson said. Regional governments shouldn’t charge a retail store 10 million naira ($62,000) and phone companies 100 million naira for the same-sized space, she said.

Torched Office

MTN, Africa’s largest phone operator, is planning to sell a stake in its Nigerian mobile tower network, which it values at more than $1 billion. Sunil Mittal, the billionaire chairman of India’s largest mobile-phone operator Airtel, said in a May interview that operators are unfairly taxed in Nigeria because the industry supports other areas of the economy.

A five-year insurgency by the Islamist group Boko Haram in the northeast of Africa’s largest economy has “badly affected” phone companies’ operations in the region as militants target telecommunications network sites, Johnson said. An MTN office in the northeastern city of Maiduguri was torched by suspected Islamists in 2012. Its base stations and towers have been attacked in the past.

“There are parts of the northeast that no operator can go into even if they want to,” Johnson said. “Whenever they have to desperately go and maintain, they do get the support of the security forces to escort to their base stations to do their work.”

Tap Demand

Still, Nigeria is a target for international phone companies eager to tap into demand from the country’s 170 million people. The total number of connected mobile-phones increased to 177 million as of the end of April, compared with 170 million at the start of the year, according to the Nigerian Communication Commission.

MTN said in April it secured a $3 billion loan to invest in the country, while Lagos-based Globacom Ltd., the third-biggest carrier, is spending $1.25 billion to upgrade and expand its network.

Nigeria plans to award seven licenses within a year to companies that will build fiber-optic networks in each of the country’s six geopolitical zones and Lagos, the commercial capital and sub-Sahara Africa’s largest city, Johnson said. The nation wants to reach 30 percent broadband penetration by 2017.

“These companies will build the infrastructure which they will then lease to the network operators,” she said. “So in this way, we are trying to attract more investment into the infrastructure.”

http://www.bloomberg.com/news/2014-08-01/nigeria-to-reduce-taxes-for-phone-companies-to-boost-investment.ht

Tomorrow some will cry about Dangote been favoured. No, not by a long shot, he is only ready to put his money where his mouth is.

nerodenero: I am not 'pro' or 'anti' Jonathan, PDP or APC,all I want is good governance that would attach value to the commoners.Thats my take.

That's why I said the high lifts all boat. We need more high tide not less. The masses will suffer more, if the reserve were the case.

nerodenero: This is a huge plus for Jonathan's government but the masses are still suffering.

"a rising tide lifts all boats" We should keep all hands on deck to see a continuation.

AdetayoS: I knw most of dis pro Jonathan guys on nairaland hv been paid.

So who paid you to be anti Jonathan?

I was reading thru some Bloomberg news article this morning and this came up

"Violence is not the only risk investors need to look past. Governments in Ghana and Zambia are struggling to finance their budgets less than a decade after having most of their debt written off. Both countries had their credit ratings downgraded in the past year, while Ghana’s cedi dropped 35 percent against the dollar in 2014, more than any other currency, pushing inflation to 15 percent in June".

Nigeria with all her problems according to our friends from Ghana is paradise when compared side by side. Which by the way is an insult. Ghana needs to be compared to Northern eastern Nigeria.

Nigeria has the potential to be one of the world’s top 20 economies by 2030 with a consumer base exceeding the current populations of France and Germany, New York-based McKinsey & Co. said in a report last week. The naira strengthened 0.7 percent this month, after six straight weekly gains.

“Many investors still believe that the risk of being in Nigeria by far outweighs the costs of being there,” Markus of Barclays Plc’s Absa Capital unit said. “It has price stability, currency stability, the economy is still on a good run, the fiscal deficit is insignificant and the current account is in surplus.”

http://www.bloomberg.com/news/2014-07-30/bombs-from-abuja-to-nairobi-fail-to-slow-africa-s-markets-rally.html

These are the kind of news APC and their supporters hate to read. Billions are made in Nigeria daily, apply yourself and stop crying poverty.

idumuose: We are waiting for him to indicate his interest to vie for the highest office.Until then,i will stand with my hands akimbo.

When people begin to remind APC about the works of their governor when voting time comes, they will come out and call it religious intolerance. This is how Buhari ran around Nigeria pretending to be holier than mohammed.

We shall see, how sick he looks/feels tomorrow in Osun.

cyril83: Most of the citizens of the listed countries are also on the run.

[b]

deletrue: Na you go worn out not Ibos. The following questions and explanations will reveal clearly your high degree of foolishness. How come you are supporting PDP which is headed by GEJ, an Ijaw man? Tell me the most devilish ethnic group that is the number one enemy to Nigerians? Are they not the northerners? Tell me if, without the Igbos who are greatly assisting GEJ to survivor till now, would there be any pdp for you to praise today? Or you think the Ijaws and indeed the entire south south will keep quite while your group, the north whose ONLY contribution is to spread the beggers, destitutes, boko haram, the killers and other irritating things to other regions, while you enjoy the black gold from the south south. You think the Ijaws and other friends of GEJ will ever forget the igbos? If not for their support, you think the rest of the other tribes will allow your group, the north to rule this country again?
I am neither an Igbo nor Ijaw man, but will support the Igbos for ever for their contributions, by supporting the GEJ which has kept this country together till this day.

[/b]

OP no worry, one day your country will have something worth mentioning. Angola overtaking Nigeria since 2002 and counting, all happening on news headlines.

[s][s]

aresa: https://www.nairaland.com/1823274/fashola-commissions-oba-lateef-adeyemi/7


Abeg do the same break down with Jona's hoses and tell us how the common man can afford Jona's houses just like you asked in the Fashola housing thread...

Abi these 10,000 Tinubu houses are not for the common man?


What were you celebrating in the Fashola thread? bad news and dumb questions and analysis right?

[/s][/s]

IGBOSON1: Nice one! But these northern ajebutters born with golden spoons in their mouths should engage in much more edifying pastimes like sports, the arts, or music, so they can rub shoulders with their southern counterparts who were not so lucky to be born into rich families but who despite this have managed to bring honour to the country and have their names engraved in gold in the nations hall of fame!

You have simply said all that is needed on this thread. God bless them with their wealth.

[s]

aresa: https://www.nairaland.com/1823274/fashola-commissions-oba-lateef-adeyemi/7


Abeg do the same break down with Jona's hoses and tell us how the common man can afford Jona's houses just like you asked in the Fashola housing thread...

Abi these 10,000 Tinubu houses are not for the common man?


What were you celebrating in the Fashola thread? bad news and dumb questions and analysis right?

[/s]

I really don't understand why Nigeria as a country is inhabited by short term politicians. Almost 4 years of his administration, this idea was kept in his pocket. After a major election, where you lost in every local government area. The least this man would have done, was to respect the voters of Ekiti, by allowing the incoming administration make such a fundamental change.

anonimi: I guess it is safe to conclude that your own case na serious comprehension challenges.
Wetin NYSC teachers dey do chai We better get our governors to recruit regularly PROFESSIONAL teachers for our children

You are not telling them anything new. They know these facts better than you and I. They, just want to turn facts upside down, to perpetrate their political propaganda, that's all. Very sad, how this country came to this. Where a group of people wait to celebrate bad news. When anything good happens, it must be discredited and undermined.

Obiagelli: common man, i asked a simple question, don't run away, why is the ministry of housing not building houses?

Run away What is the stated public policy position of the federal ministry of housing since 1999 in Nigeria.

Obiagelli: which education? Ministry of housing nor dey build house? Na Fashola how we go buy?

There's no need furthering this discussion. Your scope of reference and mine are too divergent. Have a nice day madam.

Obiagelli: you mean we should borrow money from gej to buy Fashola's houses? Chaiiii daris God ooo. What happened to ministry of housing and its budget?

Oh my God, oh God, what happened to this country's educational system

Obiagelli: i thought tinubu had a share of the house prices hence the 20 million Naira per unit. Oops its a pdp something.

Where did you see N20M per unit? you are proving to be worse than I thought. Let me ask you again, do you know what mortgage finance is?

Obiagelli: is it true that tinubu is going to share the houses to his cronies?

Where did the article posted by OP of this thread talk about tinubu?

anonimi: How can they know when they have been taught in their secondary schools by youth corper teachers since their APC state governors are not employing PROFESSIONALLY qualified teachers and thereby adding to youth UNEMPLOYMENT

I refuse to believe these folks don't know. Its just political wickedness to them. Mislead as many as possible, in hopes of spreading their propaganda.

Obiagelli: imagine 10,000 homes without pishure? Reminds of 1.6 million jobs and subsidy refinaries. Pdp can lie!

amazing, this is what you got from this article, truly amazing

Sincere9gerian: The minister of finance and coordinating minister of the economy, Dr Okonjo Iweala, this afternoon launched the rollout of the Federal Government’s 1ST set of 10,000 MORTGAGES SCHEME being implemented through the Federal Ministry of Finance in collaboration with the Federal Ministry of Lands, Housing and Urban Development.

The launch was aired live on national TV.

The scheme is a private sector driven, Federal Government initiative with strong support from the Nigerian Mortgage Refinance Company and Primary Mortgage Lenders (PMLs). It is being implemented in partnership with 22 or so state govts and the Central Bank of Nigeria and backed by development partners including the World Bank, the African Development Bank, DFID, etc,

Under the scheme, 10,000 eligible Nigerians will be awarded mortgages worth between N2 million to N20 million at low interest rate in the first phase. Physically challenged applicants will be given special attention.

Interested Nigerians should apply online at www.housingfinance.gov.ng from next Monday.

Some of the eligibility criteria mentioned by the minister include age 18 years and above, evidence of regular source of income (private or public establishment), evidence of payment of tax, etc.

Goodluck!

Is this a housing program or a mortgage finance program. Why are these almajiris consumed by hate. The article clearly states "Under the scheme, 10,000 eligible Nigerians will be awarded mortgages worth between N2 million to N20 million at low interest rate in the first phase. Physically challenged applicants will be given special attention". Money you can take to approved private sector developers. Why do you people constantly try to mislead this forum.

Why are Apc maggots, coming out daily to spread lies and propaganda. Are you telling us you don't know what Mortgage finance is?

Nigeria’s economy outlook growing, says World Bank
Posted by: Nduka Chiejina, Abuja in Featured, News 1 min ago
Nigeria’s short term macroeconomic outlook improved in the first half of this year relative to 2013, according to the World Bank in its new Nigeria Economic Report (NER) launched yesterday in Abuja.
The report states: Revenues to the Federation have increased, foreign reserves have stabilised, the Excess Crude Account (ECA) has been augmented, and prospects for growth are stronger than last year.”
The stabilisation of foreign reserves the World Bank said, “reflects greater confidence among investors. Following a year of decline, foreign reserves stabilised in April-May, in the context of improved confidence of investors.
The precise causes of this stabilization the World Bank noted, will need to be assessed further when more data becomes available. “Yet the partial stabilisation of expectations of investors concerning oil prices, fiscal policy, and the commitment of the Central Bank to defending the exchange rate is clearly important,” said the World Bank.
Expectations about the performance of the oil sector, it said, have improved in general, bolstered by increases in oil revenues accruing to the government.

The World Bank, using the International Labour Organisation (ILO), definition, stated that “unemployment rate in Nigeria, according to a usual ILO definition, is likely lower than 10 per cent.

This, it said, “is the conclusion that comes from unofficial assessments, including that of the National Bureau of Statistics (NBS), and does not contradict the fact that the scarcity of jobs is the number one economic in Nigeria”.
As in many other developing countries, the report noted, “most Nigerians cannot afford to be completely unemployed”. “Those without good productive employment therefore typically engage in various low productivity and low paying tasks for survival.”
Unemployment, the report said, “may be better understood as an underemployment problem corresponding to a scarcity of high productivity jobs, and in many cases of highly qualified candidates to fill those jobs”. “These additional jobs and qualifications need to be created in Nigeria through accelerated private sector growth in the cities and improvements in the country’s education system.”

The re-based GDP estimates reveal a larger, more dynamic and complex economy than did previous statistics, said the report, stresses that macroeconomic risks remain due to uncertainty about future oil output, oil prices and short term capital flows.

The NER analyses new data from household surveys in 2010/2011 and 2012/2013 to reassess poverty and living standards in Nigeria and “concludes that poverty rates in Nigeria are likely significantly lower than previously believed, and progress toward poverty reduction may be stronger”.
According to the report, “poverty reduction in Nigeria appears to be primarily an urban phenomenon, with poverty rates in rural areas higher, and poverty reduction slower”.
While recent panel surveys indicate that the per capita national poverty rate based on the official poverty line may now be as low as 33.1 per cent, a large share of the Nigerian population the report said “is still not far above the poverty line, indicating vulnerability.”

“The combination of the new GDP and poverty estimates is valuable in giving us what we believe to be a clearer picture of development and poverty reduction in Nigeria,” said John Litwack, Lead Economist and Acting Country Manager of the World Bank.
The NER also highlights continuing differences between Nigeria’s regions in poverty reduction. The South and North Central regions show progress in poverty reduction between 2010 and 2013. The North West witnessed little change, and the Northeast experienced an increase in the poverty rate along with a general decline in living standards.

“Improvements in public services, key infrastructure to better connect markets, and measures to increase productivity in agriculture could help put Northern regions on a strong path toward poverty reduction,” said Mr Litwack, lead author of the report, whilst also noting the critical role of security.

In 2013, federation revenues mirrored federal budgetary revenues which also fell short of expectations in 2013, despite coverage by the ECA of a good part of the shortfalls.
The World Bank report noted that “some expenditure items were not fully funded. In particular, the capital budget was significantly underfunded while recurrent expenditures and statutory transfers were almost fully funded. Actual capital spending in 2013 was 60 per cent of planned. The federal budget deficit for 2013 of 738.9 billion Naira was 17 per cent lower than projected and amounted to one percent of (re-based) GDP.”


http://thenationonlineng.net/new/nigerias-economy-outlook-growing-says-world-bank

Stronger economic management helped Nigeria leap in the World Bank 2013 Country Policy and Institutional Assessment (CPIA) report, which describes progress African countries are making on strengthening the quality of policies and institutions that underpin development.

On a scale of 1-6, Nigeria scored 3.6 which is above the 3.2 Sub-Saharan average, and took up the 10th position out of the 39 African countries assessed. These countries are those eligible for support from the International Development Association (IDA), the concessional financing arm of the World Bank.

The World Bank said CPIA developments in 2013 were mixed among non-fragile countries and that amidst a weak and uneven global economy, more countries saw deterioration in the policy environment rather than improvement.

Slippages in economic management and weaknesses in the fiscal framework for instance, continued to weigh down on the CPIA performance of most countries like Ghana, and also pulled down the scores for Mozambique and Zambia.

In Malawi also, deterioration in financial management controls, which compromised the quality of fiscal reporting, and in accountability systems, contributed to a further weakening of the country’s CPIA score.

“By contrast, Nigeria showed steady improvement in scores, reflecting stronger economic management,” the World Bank said in the report seen by BusinessDay.



The improvement was particularly seen in debt policy and management, which the Brentwoods Institution described as outstanding, with Nigeria scoring 4.5 well ahead of the 3.3 regional average score.

“Nigeria is among the countries seeing a strengthening of debt management. In Nigeria, the federal DMO has made significant strides in improving the management of public debt since its establishment in 2000. The DMO has prepared a 2013-2017 Strategic Plan and Medium Term Debt Strategy for 2012-2015 to guide its activities,” the World Bank noted in the report.

“The DMO publishes an annual report on debt management activities, debt sustainability analysis, risk management and sub-national debt management ,amongst others. In addition, the DMO co-ordinates with fiscal and monetary authorities at several levels, to provide input into the conduct of macroeconomic policy in Nigeria,” the Bank continued.

The region’s debt-to-GDP ratio remained moderate, though rising, as several countries have turned to international capital markets (and domestic markets) to finance infrastructure needs: the ratio for the region has risen from 29 percent in 2008 to 34 percent in 2013.

However, there are significant differences across countries: for example, Ghana’s public debt-to-GDP ratio, which has risen sharply over the past few years, was 60 percent in 2013 and that of Mozambique and Senegal was around 45 percent.

But Nigeria’s debt to GDP ratio has rather dropped significantly, from 22 percent to 12 percent on the rebased GDP.

The report presents CPIA scores for the 39 African countries that are eligible for support from the International Development Association (IDA), the concessional financing arm of the World Bank.

The latest World Bank review of government policies and institutions in Africa shows that 20 percent of countries improved their policy environment to boost growth and cut poverty in 2013.

The scores, the Bank said, are an indicator of the quality of these countries’ policy and institutional framework across 16 dimensions, grouped into four clusters: economic management (Cluster A), structural policies (Cluster B), policies for social inclusion and equity (Cluster C), and public sector management and institutions (Cluster D).

The scores are on a scale of 1–6, with 6 being the highest, and are calculated by the World Bank staff based on quantitative and qualitative information. The assessment also relies on judgments of Bank staff. CPIA scores are used in determining IDA’s allocation of resources to the poorest countries.



http://businessdayonline.com/2014/07/stronger-economic-management-lifts-nigeria-in-world-bank-assessement