Domestic Debt and the Nigerian Economy

The United States national debt is large. The U.S. Debt-to-GDP ratio has grown to over 60 percent in recent years. We are more than $15 trillion in debt. In this paper I will address the federal budget, the United States debt, and the resulting impacts on society in several sectors.

The United States deficit contributes to its debt and the debt contributes to the deficit. We know the longest running uninterrupted surplus for the Unites States was from 1920 to 1930 but spent most of it combating the war. This will show how the U.S. deficits, debt, and surplus affect the following areas; the taxpayers, future social security and Medicare users, unemployed individuals, University of Phoenix students, The United States financial reputation on an international level, a domestic automobile manufacturer (exporter), and a Italian clothing company (importer).

This paper sought to answer the question whether Federal Debt is Harmful to the United States Economy. The paper examines and assesses the possible effect of high levels of debt on the United States in the context of the recent financial crisis. The analyses provides significant insights on understanding the adverse impact of national debt dynamics on medium and long term economic growth, with a special focus on the United States. This paper adopted a general theoretical model enhanced with a debt variable to address the possible issues of bias. A fixed effect panel regression was used to control factors of time and country-specific elements. Concerns of possible effect of low economic growth on increased levels of debt were addressed using

When the Federal government has to find ways to regain any money lost they lean on the expansionary Fiscal policy and the monetary policy to regain money into the economy. Whether, a change in taxes or even government spending. Even to the three major tools of the expansionary monetary policy to focus on. In the first part of this paper, I will discuss the expansionary fiscal policy and how the Federal government was involved and the changes that needed to be made to taxes, government spending. The second part of this paper, I will discuss the monetary policy and the tools the Federal Reserve used when under this policy. The expansionary fiscal policy was out to kick start the economy, and the expansionary monetary policy was out to change interest rate, and influence money supply. When discussing these two policies you have to think about one aspect when will it ever stop? Will a policy always have to be part of the economy to help the government one way or another?

This research is being submitted on June 14, 2010, for Mr. Bergeen’s Microeconomics course at Rasmen College by John Divler.

There are many original and ingenious opinions and analysis related to a topic on U.S. government budget deficit and government obligations and liabilities. As a result of the economic circumstances and current consequences of budget deficit in the United States there have been many controversial hypotheses of what future may bring to the American people. Therefore, I would like to face deeply inquire in to of how our countries government deficit and outstanding debt will affect its citizens and I also assume there are new challenges taking place as the consequence of rising government debt.

(Eds) T. Moran, E. Graham and M. Blomstrom, Institute for International Economics, Washington, DC, pp. 221–44. (Accessed on 13 November 2012)

The expansion of government debt prompts long-term interest rates to rise. The outcome is a rise in the cost of private-sector borrowing. Private capital investment can be discouraged as a result of higher borrowing costs. This is important since private capital investment is a vital element of long term economic growth.

This paper is mainly focusing on the historical background and causes of debt crisis in late 1970s and 1980s.

Due to Nigeria’s corrupt government, their citizens are deprived of the steadly revenue that the country makes thru the oil companies operating in their country. Most profits are taken from the public and are kept held with Nigerian officials. People in the Nigeria are currently living in extreme poverty. Government officials are taking all of the profits made from the sales of oil leads to a horrible infrastructure. Nigerian citizens are unable to have access to electricity and water. On another note, CIA World Factbook states that the literacy rate in Nigeria is currently seventy-two percent and females at fifty percent (CIA Work Factbook). Due to the corruption of government officials, making it hard for Nigeria to create growth within

The diversity of the country’s export base has been eroded by focus on hydrocarbon activities, however limited growth in the non-oil sector has helped diversify the economy during the past decade. Agriculture remains relevant as main source of employment. In the 1990’s, uncontrolled debt levels, debt restructuring, failure to meet payment deadlines and write-offs damaged Nigeria’s a reputation. Nigeria returned to civilian rule in 1999, after independence from Great Britain in 1960 was followed by years of military rule. (Nigerian Government, 2015).

Over the past few decades Africa’s overall economic performance has been in decline especially in the 1980s. There has been little prospect for the future of most of these developing countries, however during recent years there has been a degree of optimism considering the development performance of the economy as well as providing a better long term future. The crisis emerged in 1982 with their debt rising above $140 billion to over $270 billion in 1990 (World Bank, 2013). There has been stagnation regarding the growth of their economies but despite periods of success Africa has been unable to unleash its full potential. In order to fully understand the effects of the debt crisis further examination into the background and causes of the crisis is needed, with attention to specific countries. The effect of the debt on the development of the region has to be discussed in detail in order to understand the difficulties most of these countries face with repaying their debts and promoting continuous economic growth. By highlighting the degree of optimism which has been evident in recent years for developing countries to progress, we can argue that there is a future for most of these countries when they look past the obstacle that debt presents. Especially in the 21st century where Africa is seen as one of the leading economies. This raises the possibility that despite huge overall debt stocks, that Africa may rise on the world economic platform and over take a few of the world’s

A study was conducted on foreign aid, domestic savings and economic growth by (khan & Rahim, 1993).the result indicates a positive but insignificant result statistically of economic growth with its varies form of contemporaneous values of economic assistance. Foreign aid shows statistically a significant positive correlation with economic growth. From the regression analysis the result shows negative correlation between foreign aid and domestic effort. In a whole the result shows a positive relationship among financial aid, economic growth and savings.

Data released by the Bank of Ghana recently showed that Ghana’s debt stock rose to GH¢ 97.2billion (or US$25.6billion) in December 2015, equivalent to 72.9% of GDP. Out of this, total external debt amounted to GH¢57.8billion (43.4% of GDP) and domestic debt was GH¢39.4billion (29.5% of GDP). Therefore, based on Ghana Statistical Service population projections as at the end of 2015, every Ghanaian citizen, including children owe about GH¢3,512.81 in government debt compared to GH¢872.99 as of 2011. As government runs budget deficits, mainly leading to the rise in the debt level; servicing the debt comes with severe consequences.

Furthermore, banks act as a conduit for the transmission of monetary policy. They provide a veritable platform when it comes to the implementation of monetary, credit, foreign exchange, and other financial sector policies of the government. Among other things, monetary policy is designed to influence the cost and availability of loanable funds with a view to promoting non-inflationary growth. The instruments available to the Central Bank to achieve this include open market operations (OMO), the cash reserve ratio (CRR), liquidity ratio (LR) and of course, moral suasion. The capacity of the banking industry to perform these functions effectively is, to a large extent, determined by the financial health of the individual institutions themselves and soundness and viability of the industry as a whole. For instance, where the majority of banks are adjudged to be weak and unhealthy, that will impair the ability of the industry to lubricate economic growth and vice versa. Against this background, the objective of this presentation is to examine the extent to which the banking industry has helped to stimulate economic activities in Nigeria and what the prognosis looks like in the post-consolidation era, come January 2006.