₦airaland Forum

Positiveminds:
Let me explain this in simple terms. Amassing Foreign Reserve in a time of hyper inflation is bad economics. People will continue to suffer because they country isn't producing anything.

Good financial management is to invest capital projects to produce more. That will arrest the problem of inflation as the Nigeria begins to stabilize against other currencies. With the present state of the economy, the naira will remain worthless, relative to other currencies. Soon,a loaf of bread would sell for N500.00, if they don't invest in infrastructure, boost production , heaping up foreign reserves will remain bad decision.

You are a cretinous fuuktard!

What hyper-inflation is taking place in Nigeria, cretin?

Sai Baba

the reserve that I comment when I say "I comment my reserve" is more important to those around me than the one you guys are releasing upandan that against lizard wey dey liff for wall sef no dey notice... abegi

AZeD1:
Stop misinforming people.
Foreign reserves is basically the money government has to pay for imports(liabilities). Has nothing to do with stability of a currency.

it has everything to do with stability of currency.

AZeD1:
Stop misinforming people.
Foreign reserves is basically the money government has to pay for imports(liabilities). Has nothing to do with stability of a currency.

shut up and stop saying what you dont know.foriegn reserves has everything to do with the stability of a country's currency.go back and read your elementary economics text books it will cure your ignorance

usibengate:
You seem not to understand what you are saying! What is import liabilities go make research and come back to post your findings please. You are at variance with what foreign reserve means

This article says Nigeria has more Foreign reserves than South Africa, given a choice, which currency would you rather buy?

Sagamite:
You are a cretinous fuuktard!

Which country funds its national budget from its foreign reserve?

Kindly ignore him . Most of the them rely on Radio Biafra news.

CodeTemplar:
Can you compare Agric Ministry under Adesina to what it is under Ogbeh today. If we break this admin down ministry by ministry and compare to 4 - 5 years ago, it becomes easier to see the faults of the current admin.
Ask yourself what our Agric output would have looked like if the Buhari govt didn't default on fertilizer payment and doubled investment on other aspects of agric?
The APC knew what the system was like before their campaign. We can't use handover conditions to justify a 3 years of weak growth.

for your information,
Adesina did nothing for agriculture in Nigeria. e-wallet, subsidy on fertilizer, increase in local rice production, etc all are lies.
Audu Ogbeh has started his own lies too (yam exports, cbn loan to farmers, etc)

to cut a long story short, they are the same.
if you see an ordinary prosperous Nigerian farmer, the secret of his/ her success is through sheer hardwork and farmers` co-operatives not through any government aid or assist.
Believe the words of a farmer.

What is our debt profile like. Also compare it South Africa or even the worse country in Africa and tell us the score. Propaganda government. Failed state

abduljabbar4:
What we went through in 2015, 2016, and half of 2017 was nothing but the result of the foolish buffon. Even madam puff puff told nigerians to prepare for a hard time and lets not forget how gej had to borrow inorder to pay salaries a few weeks before he handed over to Buhari. Now that the mess has been cleaned up, its time to get to work. Sai Baba.

If you like go and get yoyr pvc. my one vote will scatter your 1 useless vote

Shut up, the "foolish Buffon" didn't hand over power to COWhari in 1984.

What is our debt profile like. Also compare it with South Africa or even the worse country in Africa and tell us the score. Propaganda government. Failed state

AZeD1:
Stop misinforming people.
Foreign reserves is basically the money government has to pay for imports(liabilities). Has nothing to do with stability of a currency.

The people that gave your comment like and even share it are like you that know next to nothing. Your case is like a blind man showing road to another blind man.

See the importance of foreign reserve to a nation and stop misleading people that want to learn.

Why Foreign Exchange Reserves are Important
  Vinish Parikh   February 9, 2010
Foreign exchange reserve can be defined as deposits of a foreign currency held by the central bank of a country. Here are some of the reasons why it is important for a country to have good amount of foreign exchange reserves –
1. It increases the confidence in the monetary and exchange rate policies of the government.
2. It enhances the capacity of the central bank of the country to intervene in the foreign exchange market and control any adverse movement and stabilize the foreign exchange rates to provide a more favorable economic environment for the progress of the country.
3. During time of any crisis foreign exchange reserves come to the rescue of any country so as to absorb the distress related to such crisis.
4. It also adds to the comfort of market participants that domestic currency is backed by external assets and hence it also helps the equity markets of the country, because due to strong reserves many people from foreign countries are willing to invest in the country having strong foreign exchange reserves.
However holding too much foreign exchange reserves is also not advisable because it involves the opportunity cost of money tied in reserves rather than investing somewhere else which could have earn higher return on the invested money.

vani86:
It means Naira to other foreign exchange remain stable and not fluctuate anyhow, it leads to stability of a countries currency when compared to others.

so yes, it affects the common nigerian indirectly

...I don't think it's tru..instead the +ves from it is that it helps to grow the economy as many partner trading nation's will look up naija's credit rating as ok..since the foreign reserve is ok enough to sustain d nation's import for a longer period. but the bad news is that.if the imports are guaranteed for the country

Mypeople2:
Well that is nice.It is like having N10,000 in your account yet you are sick,hunger,homeless, untidy,begging people for N100 and even borrowing N50 everyday from people,still you don't want to touch that 10k.In fact,you are adding the little ones they give to you to the 10k.Nigeria,I hail thee!

Did Buhari not say that he doesn’t know how to make money?
Did Obasanjo not confirm that Buhari is zero on economic issues?
Did our economy not collapse in the 1980s when he ruled for two years
So no surprise that he is borrowing to do political games and propaganda for his APC zombies of fake reserves growth.

engineerboat:
According to data from the Debt Management Office (DMO), total debt profile as of early June 2015 was approximately N12.06 trillion but Director General of the agency, Ms. Patience Oniha told members of the National Assembly recently that as of September 2017, the debt stock for both the federal and state governments had risen to over N20.373 trillion.

In addition to this total, the Federal Government floated the $3 billion Eurobond in November 2017; N10.69 billion Green Bond in December 2017 and another $2.5 billion Eurobond early this month, all totalling another N2 trillion.

Prior to the Paris Club debt relief in 2004, Nigeria’s overall debt stock was $46.2 billion with external debt standing at $35.9 billion while the stock of the domestic debt amounted to $10.3 billion resulting in a total of about US$46.2 billion.

But between 2010 and 2014, the nation’s debt profile rose by $18.40 billion (N3 trillion) according to the analysis of DMO going from $35.09 billion; to $41.55billion in 2011; to $48.49 billion in 2012; $54.54billion in 2013; and $53.49 billion in 2014.

At the 2017 World Bank/International Monetary Fund annual meetings in Washington DC, last October, both the World Bank and IMF raised the issue of Nigeria’s rising debt profile, warning of the dire consequences of this should there be a slump in the price of crude oil, Nigeria’s main foreign exchange earner.

But in her defence of the government’s strategy, Finance Minister, Kemi Adeosun, told financial journalists at the meetings in Washington that, “Nigeria’s debt-to-GDP ratio is one of the lowest. We are at 19 per cent, but most advanced countries have over 100 per cent.

“I am not saying we need to move to 100 per cent, but I am saying we need to tolerate a little more debt in the short-term to deliver the rails, the roads and power so as to generate economic activities, jobs, revenue, which would be used to pay back the debt.

“What we are trying to do is to create enough headroom to invest in capital projects that the country desperately needs. I do not think there is any Nigerian that will say we do not need to invest on power, do the roads, and that will not want us to fix 17 million housing deficits, build rails and they will generate economic activities and jobs.”

She added, “Why do we have to borrow? If you think back to the problem we face, our principal source of revenue plummeted by up to 85 per cent, so we had no choice.”

At 19 per cent, Nigeria’s debt to GDP is healthy but the real issue is the debt to revenue ratio, which is what actually determines the ability of the country to repay her debts. According to Mrs Gloria Joseph-Raji, a World Bank’ Senior Economist, Nigeria’s debt to revenue went up from 35 per cent in 2015 to 60 per cent in 2016. If without the new foreign debts Nigeria currently expends 66 per cent of her total revenue on debt servicing, leaving just 34 per cent for both capital and recurrent expenditure, what sense does it make to take more debts? What economic sense does it make to borrow more to offset existing debts?

However, the Bank for International Settlements Data regards the flurry of recent Eurobond issuance as adding to an already-record debt tally for sub-Saharan Africa, which has ballooned to over $200billion from less than 30 billion in 2007.

Speaking with Reuters, a news agency, Kevin Daly, Asset Manager at Standard Life Aberdeen, said, “If you have a lot of issuance in a short period of time, that tells you something.

“Maybe these guys are realising that their borrowing costs are going to potentially go higher over the course of the year if we get a continued rise in Treasury yields and further rate hikes by the Fed.”

And according to both Finance Minister Kemi Adeosun and Oniha, Nigeria intends to lift the proportion of dollar debt to 40 percent from its current level of 27 percent, to replace expensive naira bonds with 10-year interest rates as high as 14 percent.

“Nigeria is focused on reducing the cost of our debt portfolio and ensuring we have the optimal mix between domestic and international debt,” Adeosun said.

“The proceeds of the dollar issuance … will be used to re-finance domestic debt, which is high-cost and short-term, with lower-cost international debt with a longer tenure.”

Oniha on her part told Saturday Tribune that the country’s debt management policy entails that 60 per cent of borrowing should be from the domestic market, that is, Treasury Bills, FGN Bonds, Savings Bonds and then Green Bonds, and then 40 per cent should be external.

“The reason for that strategy is that, just as you diversify your investment, you also diversify your sources of funding so you are not dependent on only one source.

“The percentage of our external debt before we went to the market in November 2017 was only 23 per cent of our total public debt.

“That was even an improvement when you compare it to 2008, 2009 where over 80 per cent of our total public debt was from the domestic market.”

Ironically, Oniha said Nigeria was borrowing more externally in order to ultimately reduce the burden of debt service, explaining that by 2016 and 2017, Nigeria was borrowing at rates as high as 17 and 18 per cent while the rate on Treasury Bills, which is a discounted instrument, got to about 18 per cent.

Describing the rates as high, the debt management boss said that was the rationale behind the government’s resort to borrowing internationally at anywhere between 6 and 7 per cent.

“If we pick the November $3billion euro bond we issued, the one for 10 years, the $1.5billon was at 6.5 per cent and the one for 30 years was 7.62 per cent.

“If you compare those to the domestic borrowing, you are making huge savings including even for the 30years.

“So for the 30 years, you are making a savings of up to 10 per cent per annual and that is huge. In terms of interest cost, which you can describe as debt service, going external reduces the growth of our debt service obligations.

“It also reduces the cost of borrowing. Then of course we were able to access longer term funds, which is what we need to build major roads, major bridges or airports.

“It is not five-year money you would use; it is long-term money for structures because structure-money is always long term because infrastructure can last several generations.”

On efforts by the Federal Government to stem down both domestic and foreign borrowings, Adeosun said, “The solution to borrowing in Nigeria is that we must pay tax. If you pay the taxes properly, there is no need to borrow. Of course, there is the responsibility on the part of government to be more responsible and efficient. We are really focusing on this. We are trying to find ways to cut cost.”

Nonetheless, there have been allegations, especially by the National Assembly that government has been diverting parts of the loans taken to projects other than those for which they were obtained.

Senate recently alleged a diversion of $600 million foreign loan meant to revive the power sector to remodelling of four airports across the country.

The said $600 million Euro bond from the Chinese government was meant for the rehabilitation of the power sector but $100 million of the said sum was said to have been used as counterpart funding for the remodelling of the airports in Lagos, Abuja, Kano and Port Harcourt.

Another investigation also revealed that about $4.8bn foreign loans obtained between 2015 and 2017 were on programmes and not projects for which they were obtained. Some of the loans include Economic Governance, Diversification and Competitiveness Support Programme (EGDCSP) getting allocation of $600m.

The programme was meant to create the fiscal space to facilitate a smooth implementation of the government’s budget, support fiscal and structural reforms, and improve the targeting of social sector spending to protect the most vulnerable segments of the population.

There was another $500m taken from the International Bank for Reconstruction and Development (IBRD) and $400m AfDB Fund for development finance institutions.

Yet again was $500m from the International Development Association (IDA) for the Saving One Million Lives, which is a scheme to expand access to essential primary health care services for women and children.

According to DMO, the Federal Government secured UA3.3m ($5.06m) and $200m for the Urban Water Sector Reform and Port Harcourt Water Supply and Sanitation projects, and $33.17m for the Ogun State Urban Water Supply Project, while the remaining $100m was for the Lagos Integrated Urban Development Project.

https://www.thebreakingtimes.com/buhari-plunges-nigeria-into-n10-trillion-debt-in-30-months/amp/

www.nairaland.com/attachments/6767219_nigeriaexternaldebt2x_png7cda6c51e2e0438b874285362a00afa3

ihatesycophant:
The people that gave your comment like and even share it are like you that know next to nothing. Your case is like a blind man showing road to another blind man.

See the importance of foreign reserve to a nation and stop misleading people that want to learn.

Why Foreign Exchange Reserves are Important
  Vinish Parikh   February 9, 2010
Foreign exchange reserve can be defined as deposits of a foreign currency held by the central bank of a country. Here are some of the reasons why it is important for a country to have good amount of foreign exchange reserves –
1. It increases the confidence in the monetary and exchange rate policies of the government.
2. It enhances the capacity of the central bank of the country to intervene in the foreign exchange market and control any adverse movement and stabilize the foreign exchange rates to provide a more favorable economic environment for the progress of the country.
3. During time of any crisis foreign exchange reserves come to the rescue of any country so as to absorb the distress related to such crisis.
4. It also adds to the comfort of market participants that domestic currency is backed by external assets and hence it also helps the equity markets of the country, because due to strong reserves many people from foreign countries are willing to invest in the country having strong foreign exchange reserves.
However holding too much foreign exchange reserves is also not advisable because it involves the opportunity cost of money tied in reserves rather than investing somewhere else which could have earn higher return on the invested money.

India, Brazil, Taiwan and Mexico all have more foreign reserves than the UK.
Given a choice to buy just one currency, which would you pick?
Pounds, Rupees, Peso, Taiwan Dollar, Real.

Redoil:
Mumu people what is the essence of huge savings when there is hunger and no infrastures in place to better the lives of nigeria
Buhar and his followas na who mumu pass self

funny enough foreign reserves isn't a saved money, it adds no real value

guterMann:
Another cheap propaganda from APC.

External reserve does not mean anything.

(1) The monies in the foreign reserve include the ones from depts(BONDS AND TREASURY BILLS) that are foreign currency denominated.

(2) The foreign currency remittances from Nigerians abroad.

(3)The difference between the oil benchmark and the oil price.

If the country is that 'rich' why not fund the budget from the Foreign Reserve?

Foreign reserve means nothing,A BETTER INDICATOR IS THE DEBT TO INCOME RATIO,I DARE APC TO RELEASE THE DEBT TO INCOME RATIO OF NIGERIA.

THE LAND OF THE RISING SUN MUST SET FORTH AT DAWN

Pls go back and edit your perfect answer.

It is Debt and not Dept.

Your answer is the best.

AZeD1:
Even you admit that this a short term strategy.

And so what! It is a short term strategy that has been in use for decades in Nigeria.

AZeD1:
Stop misinforming people.
Foreign reserves is basically the money government has to pay for imports(liabilities). Has nothing to do with stability of a currency.

Oloshi, u re wrong.
It has alot to do with our currency.

AZeD1:
India, Brazil, Taiwan and Mexico all have more foreign reserves than the UK.
Given a choice to buy just one currency, which would you pick?
Pounds, Rupees, Peso, Taiwan Dollar, Real.

I love this type of brain games, which unfortunately APC supporters can’t understand.
Let me add a twist by asking how many Nigerians are heading to India, Brazil, Taiwan and Mexico compared to the UK

Esseite:
Dont be deceived...

What do we then do with the N20tr debt profile in same 30months?

Fools paradise....

every country has a debt profile...besides this government didn't rack up all those debts..

Things are indeed looking great.


This is what you get when you don't have the PDP, Jona and their stealing and looting gangs stealing every kobo in sight.


Kudos to PMB and his marvelous team

AZeD1:
India, Brazil, Taiwan and Mexico all have more foreign reserves than the UK.
Given a choice to buy just one currency, which would you pick?
Pounds, Rupees, Peso, Taiwan Dollar, Real.

You're being myopic on the issue at hand. Foreign reserve gives investors confidence and stabilise country's currency.. If the reserve has not be depleted our currency exchange rate would have been stable by now.
You're comparing Nigeria with fairly stable economies. With this your mindset Nigeria can never grow.

semyman:
They will still not be happy. Children of hate will always prefer the looting gang

Looting gang like the Abacha family that Buhari said did not steal our money despite recoveries?
Looting gang like Babachir, the N450 million grass cutter?
Looting gang like Buratai who owns multi million dollar mansions in Dubai?
Looting gang like Maina the pensions thief who was sacked and declared wanted by Jonathan but reinstated and promoted by Buhari
Buhari is not just a thief and rogue.
No.
Buhari is the worst thief, rogue and corrupt hypocrite to ever ruin our country.
The worst.

CodeTemplar:
And so what! It is a short term strategy that has been in use for decades in Nigeria.

And you wonder why Nigeria is still a 3rd world country?

reserves that we still borrow from......its not our money jare

Kingspin:
Good for nothing reserve. What purpose does it serve the people? Empty leaders everywhere.

Read the thread. It gives our currency a bit of stability versus other currencies. Buhari is very conservative with our FX for reasons best known to him.

AZeD1:
And you wonder why Nigeria is still a 3rd world country?

The day we start producing other things asides oil is the day we start growing. Anything oil earning ends up being shared and looted. The govt is a drain.

Ugosample:
Oil prices has more than doubked since 2016

So this is to be expected
No big deal.
The oil price falls tomorrow, and you will see how that reserves will fall.

My issue now is..
.
Why is this govt plunging Nigeria into serious debt, without tangible projects on ground?

This country sef

So why was the reserve falling when oil price was very high during the last govt?

cosmos1440:
for your information,
Adesina did nothing for agriculture in Nigeria. e-wallet, subsidy on fertilizer, increase in local rice production, etc all are lies.
Audu Ogbeh has started his own lies too (yam exports, cbn loan to farmers, etc)

to cut a long story short, they are the same.
if you see an ordinary prosperous Nigerian farmer, the secret of his/ her success is through sheer hardwork and farmers` co-operatives not through any government aid or assist.
Believe the words of a farmer.

You spoke like a typical Nigerian.
He did nothing but immediately FG started defaulting fertilizer payment under Buhari the farmers complained. I hail thee.

jamace:
So 12 trillion naira debt in 5 years is equal to 20 trillion naira debt under 3 years? Na wa for some people maths o.

You people are half smart. Debt remain the same in dollars. Stop change it to Naira and see the value is the same from. Exchange rate has changed, this government has not added to the external debt.