FG’s borrowings for 2018 budget to hit N2tr — FSDH

FG’s borrowings for 2018 budget to hit N2tr — FSDH

Economy

FSDH Merchant Bank has projected that the federal government will borrow up to N2 trillion to finance its budget in 2018, describing the nation’s debt service-to-revenue ratio, which rose to 79 percent in first quarter 2018, Q1’18, as very high and unsustainable. The bank also warned that the country cannot afford another level of naira devaluation as this will further worsen the public debt position. These were highlights of the July edition of the bank’s monthly economic and markets outlook, titled: ‘Public Debt Vulnerable to Exchange Rate Movement.’ Speaking at the presentation of the report, Head of Research, FSDH Merchant Bank, Mr. Ayo Akinwunmi, said: “The signed 2018 budget comes with a deficit of N1.95 trillion and net borrowing of N1.64 trillion. The federal government says the net borrowing would be financed from N793 billion domestic borrowing and N849 billion foreign borrowing. FSDH Research expects a supplementary budget to cover additional critical projects and fuel subsidy payment. This may bring the total borrowing in excess of N2 trillion in the 2018 budget implementation. FSDH Research expects that the budget deficit financing activities of the FGN may lead to an increase in yields in the domestic market from current levels.

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Corporates and governments may also soon start borrowing at higher interest rates from the domestic market.” Speaking on the vulnerability of the country’s rising external debt to the dangers of naira devaluation, Akinwunmi stated: “FSDH Research notes that the growth in the debt stock is mainly driven by external debt and was accelerated by the devaluation of the Naira. FSDH Research believes that Nigeria cannot afford another level of devaluation; otherwise it will worsen the debt position.” Meanwhile, the FSDH Research analysis shows that the ratio of domestic interest payment to the FGN revenue from the FAAC stood at 79 percent as at Q1 2018. The average in the last two years is 60 percent. This current rate, according to them, is very high and unsustainable.

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About the Author

Imaeruaka Joseph .N

Imaeruaka Joseph .N

I believe in sharing wisdom with others. Utilizing life to its maximum and blogging is a call for me . Who is Imaeruaka Joseph? Imaeruaka Joseph also known as Inbuilt-Wisdom JIN, is an indigen of Amesi town, in Aguata local government area, Anambra state. Skills? 1. Copy writer (specialty; sales copy) Currently works with Sky blazer ventures, Niger standard industry ltd, Azodo fish farm. 2. Content creator (short stories, articles, memes and poems) Currently works with Andora Novella, Tis foundation and Medium. 3. Author at Amazon (kindle direct publish) Imaeruaka Joseph up to date has six books published on Amazon. -Marriage forum -Wisdom from its inbuilt -The Compile -Did i have sex? - a memoir -Maintenance of some basic electrical components -The poem stream. 4. Blogger at Millitime (www.Millitime.com) He has over 100 + posts on millitime opened to viewers world wide. 5. Presentation. Reach out to me via email, [email protected]

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