Recent report released by the Debt Management Office shows that our nation’s foreign debt profile is pegged at $40billion, far lower than the world’s largest economy - United States of America’s debt profile, which is pegged at $14trillion - the former saying it is healthy for its economy, the latter battling to cut budget deficits and streamline its expenditure to cope with the economic challenges to come.
From the United Kingdom it is not really encouraging as Prime Minister David Cameron admitted in a recent statement that his government’s ability to control and nmanage the debt profile situation of his country is getting tougher than expected, he has been warning of another serious economic crunch, with the report that the four major British banks - the Royal Bank of Scotland, Barclays Bank, HSBC and the Lloyds Bank are having dangerous exposures.
From the analysis, it is clear that if something strategic is not done, the Commonwealth Grandmasters may find themselves in a fiasco economic situation that will need some ‘Jackie Chan’ type of stunts to salvage them from any total collapse and breakdown.
Bloomberg’s recent report on the debt profile of the developed and strategic economies in the globe shows there is real concern over what the future would like if governments do not entrench a fiscal discipline in the way debts are managed.
Currently, the Global Economic outlook looks sluggish for the beginning of 2012, even as IMF has cut its growth forecast from 4.5 percent to 4 percent due to the Euro-debt crisis, American Debt Profile challenge and the uncertainty in the markets of the developed economies.
From the analysis, governments of the world’s leading economies have more than $7.6trillion debt maturing this year, with more facing a rise in borrowing costs for nations like Japan, United States, other G-7 economies and the ‘BRIC’ economies.
Japan has the highest Debt Profile of $3trillion, United States $2.8trillion, while the G-7(Canada, United Kingdom, Germany, France, and Italy) and the BRIC economies add up to the equation with $1.2trillion.
A major Point here is ‘Have Global Leaders learnt from the unfortunate Euro-Debt crisis trend that is posing a great threat to its regional stability? I believe this is a time for global leaders and economic teams of nations to review their expenditure, priorities, and economic goals.
The mismanagement of Bonds and Loans and poor prioritisation are part of the reasons why some governments in Europe, especially the ‘PIIGS’ axis (Portugal, Ireland, Italy, Greece, and Spain) found themselves defaulting in the ‘Eurozone’ and becoming heavily indebted.
It is sad that the citizens are always the ones to bear the brunt of such economic blunders, and the ‘Austerity’ Language used by the ‘PIIGS’ governments has been greeted with violent reactions from workers and pensioners who are frustrated and agitated with the fact that salaries will be cut, Value Added Tax will increase, pensions will be affected, and retirement age will be extended.
For Nigeria, there are lessons to learn from the events unfolding in the United States and Europe. The recent report released of the $40billion foreign debt profile is timely and the statement that it is healthy for the economy is good. But should we exceed this current profile to unnecessary loans and aids again from financial agencies, it could become a severe political economic condition.
With a retrospect to the Structural Adjustment Programme, we can remember that the reason for going through that ‘Austere’ period in the IBB Administration was because of the conditional loans and aids we got from the Bretton Woods agencies The World Bank and International Monetary Fund.
Unfortunately the Implementation of the ill-timed fuel subsidy removal by the President Goodluck Ebele Jonathan Administration January 1,2012 is having adverse and harsh economic effects on Nigerians, and the argument that if it is not implemented government will go broke shows the poor gap in communication between the Nigerian Government and the populace for the past 12 years.
A November 13,2011 Sunday Thisday Newspaper Economy quoted a Debt Management Office report for June,2011 showing that states in the country were owing in total $2.2billion (About 330billion Naira)worth of Foreign debt, and there are fears that they may be experiencing a cash crunch following the challenge of sustaining the payment of the new 18,000.00 minimum wage.
Some analysts are of the view that the reason for this heavy debt burden and threat of a possible crunch, is as a result of the mismanagement of resources and funds, and expenditure on projects and programmes that are not impacting on the populace.
The era of wastage must give way to a time of responsibility, accountability, transparency and integrity in the governance and leadership of our national resources. We need to imbibe these tenets if we are to experience economic sustainability.