THE ECONOMIC IMPLICATION OF INCREASING EXTERNAL DEBT LIABILITY IN NIGERIA. A HISTORICAL PERSPECTIVE OF NIGERIA’S EXTERNAL DEBT
ATTENTION:
BEFORE YOU READ THE CHAPTER ONE OF THE
PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!
INFORMATION:
YOU CAN GET THE COMPLETE PROJECT OF THE
TOPIC BELOW. THE FULL PROJECT COSTS N5,000 ONLY. THE FULL INFORMATION ON HOW TO
PAY AND GET THE COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN
CALL: 08068231953, 08168759420
THE ECONOMIC
IMPLICATION OF INCREASING EXTERNAL DEBT LIABILITY IN NIGERIA
A HISTORICAL
PERSPECTIVE OF NIGERIA’S EXTERNAL DEBT
The
management of Nigeria’s external debt has been a major macroeconomic problem
especially since the early 1980s. For many years now, the country’s debt has
been growing in spite of the efforts being made by the Government to manage and
minimize its crushing effects on the nation’s economy. Such efforts range from
the various refinancing and restructuring agreements to debt conversion
programme and the deliberate allocation of substantial resources towards
servicing the debt. Of particular concern to the authorities, is the heavy debt
burden it imposes when compared with the country’s debt service capacity
(Ogunlana, 2005).
Prior to
1978, the level of Nigeria’s external debt was very low, standing at about $3.1
billion and represented barely 6.2 percent of GDP. However, by 1977/1978 when
Nigeria experienced a temporary decline in oil receipts, the first Jumbo loan
of $1.0 billion was raised from the International Capital Market (ICM) with
grace and repayment periods of three and eight years, respectively, and a
relatively high rate of interest, (LIBOR + 1.0 percent) compared with the
existing debts that were largely from the multilateral and concessional sources
with long maturity period and other more generous terms of repayment. At the
peak in mid – 1989, LIBOR was 13.0 per cent. That loan was followed by the
second Jumbo loan of $750 million in 1978/1979.
Between
1979/1980, there was an up-turn in the global oil market which improved
Nigeria’s foreign exchange inflow. The relaxation of economic policy measures
and the adoption of deflationary measures prompted massive importation of goods
and services which brought about rapid depletion of reserves. Shortly
thereafter, the global oil market witnessed serious glut which brought down the
price of crude oil with the attendant devastating impact on the Nigerian
economy.
The thinking
that the oil glut would be short-lived prompted both the states and the Federal
Government to engage in external borrowing. They flagrantly breached Decree 30
of 1978 which fixed the limit of external borrowing at N5.0 billion US ($8.3
billion) and embarked on imprudent and massive external borrowing from the ICM
to finance all sorts of projects. Moreover, the massive importation which
prevailed and the indiscriminate issuance of import license with total
disregard to the level of reserves and capacity to pay, resulted in massive
build up of trade arrears for both insured and uninsured trade credits
(Ogunlana, 2005).
Indeed, the
reality and the magnitude of Nigeria’s debt problem did not dawn on the country
until 1982 when creditors refused to open new lines of credit. This led the
country to seek relief in the form of refinancing of the trade arrears. The
first of such exercise was in 1983 covering outstanding letters of credit as at
13th July, 1983 for $2.1 billion. By 1988, the terms of Promissory Notes issued
for trade credits were renegotiated and the total value of notes issued
aggregated to $4.8 billion.
Consequently
the level of external debt rose rapidly from $9.0 billion in 1980 to $17.8
billion and $25.6 billion in 1983 and 1986 respectively. The level of debt had
since risen to $35.9 billion by the end of 2004 despite all the repayments,
deliberate policy of drastic curtailing of further external borrowing and the
various debt management strategies adopted, including debt conversion and
buy-back.
These
developments completely altered the structure and character of Nigeria’s
external debt from largely concessional sources of long maturity to
short/medium with tough repayment terms. Of the total debt outstanding, the
value and share of the Paris Club debt increased progressively from $5.8
billion or 33.5 per cent in 1984 to $21.7billion or 66.5 per cent and $30.8
billion or 85.8 per cent in 1995 and 2004 respectively. On the contrary, the
share of multilateral debt as well as private debt (promissory notes and London
Club Banks) have declined persistently over the years from a total of $11.5
billion or 66.5 per cent in 1984 to barely $5.1 billion or 14.2 per cent in
2004.
The
deliberate policy of the government to limit further borrowing, including from
concessional sources, the strict compliance with the repayment terms of
multilateral loans as well as the deal regarding London Club debt which almost
provided total solution to such debt, accounted for the declining trend in the
stock of debt owed to these sources. On the other hand, the conditions and
terms of debt rescheduling with the Paris Club imposed difficult conditions
which did not only make repayment difficult, and extremely tight, but made the
debt owned to this source to grow rapidly over the years. Paris Club debts are
official bilateral debt and export credit which were guaranteed by various Export
Credit Agencies (Abrego and Ross, 2001).
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following
instructions and information if you will like to order/buy our complete written
material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount
(#5,000) into our bank Account below, send the following information to
08068231953 or 08168759420
(1) Your project
topics
(2) Email
Address
(3) Payment
Name
(4) Teller Number
We will send your material(s) after
we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
FOR MORE INFORMATION, CALL:
08068231953 or 08168759420
AFFILIATE LINKS:
myeasyproject.com.ng
easyprojectmaterials.com
easyprojectmaterials.net.ng
easyprojectsmaterials.net.ng
easyprojectsmaterial.net.ng
easyprojectmaterial.net.ng
projectmaterials.com.ng
googleprojectsng.blogspot.com
myprojectsng.blogspot.com.ng
https://projectmaterialsng.blogspot.com.ng/
Comments
Post a Comment