private sector – Future Komp http://futurekomp.net/ Tue, 22 Feb 2022 02:18:06 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://futurekomp.net/wp-content/uploads/2021/03/futurekomp-icon-70x70.png private sector – Future Komp http://futurekomp.net/ 32 32 Perils of Direct SBP Credit – Journal https://futurekomp.net/perils-of-direct-sbp-credit-journal/ Tue, 22 Feb 2022 02:18:06 +0000 https://futurekomp.net/perils-of-direct-sbp-credit-journal/

WHY is the State Bank of Pakistan’s direct lending to the government primarily harmful? And why is government borrowing from commercial banks less harmful, although a bit more expensive? These two questions continue to puzzle many experts. Since direct SBP credits to the government will be illegal following the legislation of the recent amendments to the Central Bank Act, the answers to these questions are of paramount importance. Ill-informed discussions lead to misleading conclusions. So let us be informed about the related matters of lending and borrowing.

An interest-based financial system always works through the process of “financial intermediation”. The first step in this process is the mobilization of savings by increasing deposits. The secondary step is to channel these savings to investors through loans. The primary and secondary stages are essential to this process, despite their connotations. Lending cannot take place without deposit mobilization, but without lending, deposit mobilization can still take place. Our banks and non-banking financial institutions function as “financial intermediaries”. They raise deposits cheaply and lend at high rates, meeting their expenses and making a profit from a margin (the difference between lending and deposit rates).

Government borrowing from the State Bank hinders savings.

When we make a deposit, we lend our money to the bank at their deposit rate. In addition to this rate, we are comfortable knowing that our money remains safe with them and that we can recover it at any time. We therefore agree to receive a return lower than that which the banks receive by granting loans. Banks have to charge a higher rate to cover the risk of borrowers defaulting. In this system, people with an account are incentivized to save their excess funds with the lure of safekeeping, meeting withdrawal needs, making payments to others, and earning returns that would not otherwise be possible if they kept the money with them. Whenever lending rates rise, deposit rates also rise, but not necessarily at the same rate. In short, this system promotes savings, while lending funds to investors.

Now imagine that a large entity (the government) starts borrowing from commercial banks. This increases the demand for credit, without increasing deposits (savings of the people). Lending rates will then rise and deposit rates will rise thereafter, giving people with cash additional incentives to increase their deposits. This process of financial intermediation includes built-in mechanisms to promote savings, in addition to making loans accessible. In popular and even expert discussion forums on borrowing or interest rates, the whole debate revolves around “poor borrowers” ​​and rarely around savers. So don’t expect to be enlightened by these discussions. In fact, these threads always have the ability to deceive anyone.

It should now be clear that government borrowing from commercial banks should promote savings. Is this also true when the government borrows from the central bank? Of course not. Why? Because it depresses the interest rate that would otherwise have resulted. Therefore, government borrowing from the SBP constrains savings. This leads to lower amounts of loanable funds in our financial system, which reduces investments. Our financial system becomes forced to lend to the private sector. It is not necessarily high loan rates that limit our investments. These are low savings rates. While there are many reasons for low savings, one of them is government borrowing from the SBP.

Now imagine a situation where the SBP does not extend any direct credit to the government but continues to meet banks’ demand for liquidity through open market operations. Commercial banks, in turn, continue to lend to the government, albeit at slightly higher rates, which partly passes on to depositors, encouraging them to save more. Ill-informed speakers will focus on the aspect of commercial banks taking unfair advantage of the government’s loss of power to borrow directly from the SBP and will continue to rant about matters unrelated to sovereignty, forgetting that no one can withdraw the power to issue government fiat currency.

SBP’s direct credit to the government hampers savings. It can rightly be called an “effective sparing inhibitor”. This is not the only downside of this loan which comes out of nowhere and not anyone’s money saved earlier. Direct credits lead to the printing of additional currencies. Most of us are already familiar with the inflationary impact of government borrowing from the SBP, but its main disease stems from an inhibition of savings. One could object to the reasoning advanced here and say that indirect credits to banks also lead to money printing. Even if all the money borrowed by the government from commercial banks is injected by the SBP, it will not prevent savings. Often, the amount injected is less than the amount borrowed. As savings begin to accumulate, they may decrease further. The most critical point here is that the mobilization of savings should be the main driver in meeting the borrowing needs of economic agents, including the government. Direct central bank credits should not be the primary drivers, but should still be made available to banks through open market operations or other refinancing windows as additional mechanisms.

The strong negative association between direct SBP loans to government and national savings would be extremely hard to miss by quantitative researchers of time series data, some of whom fail to find a positive association between these harmful loans and inflation. The prevailing media obfuscation of political, economic and financial issues, under the cover of an alleged loss of sovereignty, is nothing but a fear stemming from dying minds. True sovereignty comes from our own national efforts, our own savings and our own investments, as opposed to borrowed efforts, borrowed savings and borrowed investments. National sovereignty should never be confused with the ability to borrow from one’s own central bank, or the fiat to issue unlimited currency. I am happy to see that many young researchers, economists and analysts, and some older ones, are free from this confusion, which bodes well for our future.

The author is a former Deputy Governor of the State Bank of Pakistan.

rriazuddin@gmail.com

Posted in Dawn, February 22, 2022

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Regulatory crisis in the Nepalese banking sector https://futurekomp.net/regulatory-crisis-in-the-nepalese-banking-sector/ Tue, 01 Feb 2022 01:28:36 +0000 https://futurekomp.net/regulatory-crisis-in-the-nepalese-banking-sector/

Nepal’s banking sector is heading down a dangerously risky path, not only due to a seasonal and often recurring shortage of loanable funds, but due to a combination of factors ranging from poor regulation and oversight by the authority monetary policy to blatant compromises in corporate governance practices by banks and financial institutions. institutions themselves in their functioning and affairs.

A recent report by the International Monetary Fund (IMF) categorically pointed to the ineffectiveness of the regulatory and supervisory role of the country’s monetary authority, the Nepal Rastra Bank, resulting in a lack of “accurate assessment of the quality banks’ assets and which better reflects the risks”. He also referred to the failure of the central bank to fully implement the first phase of the supervisory information system intended for class A (commercial) banks and move to the second stage and extend it to class B (development banks) and class C (financial companies).

The lack of appropriate data to enable effective (online) supervision and methods for calculating non-performing loans were also detected by the visiting IMF delegation which finalized the IMF Extended Credit Facility (loan) of approximately $396 million in Nepal. Interestingly, fiscal and financial sector stability is one of the three components where the loan amount will be used. Such a loan with a very short repayment period of only three years should ideally have been used in more productive sectors of the economy than in reform type spending.

Regulatory gaps

Over the years, the Nepalese financial sector has grown considerably. According to the latest data from Nepal Rastra Bank, Nepal’s financial system has 27 commercial banks, 17 development banks, 17 finance companies, 67 microfinance financial institutions and one infrastructure development bank under the bank’s supervision radar. central. The number of bank branches excluding those of microfinance institutions is 6,154, or more than 50%. Prompt and efficient supervision of all, especially onsite, is indeed a herculean responsibility for an under-automated supervisor like Nepal Rastra Bank with only 50% officer-level staff among over 1,000 employees.

Apparently, the poor regulatory framework has alarmingly increased the incidences of regulatory arbitrage. These phenomena manifest themselves in different forms. The provisionally reported profit of the 27 commercial banks in the first half of the current financial year topped Rs 33 billion. The annual rate of return on the total paid-up capital of Rs 285 billion of these Class A banks will exceed 25% by the end of the financial year. The only interpretation of these high bank profits, despite the Covid-19 pandemic and the incessant complaints about a liquidity crisis, could be that the regulator of the monetary system, in essence, failed to tame them.

There are larger structural issues blunting the regulatory teeth of the Nepal Rastra Bank. The central bank as a federal entity exercises the sole implementing authority of Schedule 5(5) of the constitution with respect to money and banking, and monetary policy. The central bank currently plays a dual role of monetary authority and regulatory and supervisory authority of the country’s financial system. A monetary authority’s exercise of powers as a central bank independent (from political interference) is unquestionable and in line with global best practice. Whether the central bank of Nepal has positioned and behaved as a fully autonomous institution is, however, another matter altogether, as also indicated in the aforementioned IMF report.

But when it comes to regulatory and supervisory functions, the monetary authority messed up badly and exhibited the “I-control-everything” mentality of the pre-reform era central bankers. Many economies have split the monetary policy function and the regulatory functions and created separate dedicated institutions for each of these two distinct tasks so that monetary authorities can focus more effectively on the central bank’s core functions of targeting the economy. inflation and systemic risk analysis. This practice turns out to be more robust than the previous one, so it is rapidly gaining popularity. But, in Nepal, even a meaningful discussion has not yet started in this direction. The competent authorities seem to ignore this need. At the heart of this inertia is the reluctance of central bank mandarins to relinquish its traditional role as regulator and supervisor (as well).

It is perhaps for this reason that the Nepal Rastra Bank, while updating its laws and regulations after the restructuring of the country into a federal policy, did not even consider creating adequate legal space for provincial governments to collaborate and provide support in its regulatory functions. This would certainly have created more desirable financial governance outcomes.

Banking crisis

Despite the proud claims of industry players as the “most transparent” company in Nepal, mainly due to the fact that they are obliged to publish quarterly provisional balance sheets and reports on stock transactions, the Nepalese banking sector gradually turns into simple wear. cartel – compromising almost every standard of corporate governance. Massive insider lending, complete disregard for apparent conflicts of interest, “rigged” account books and widespread corrupt lending practices, even in private sector banks, are some of the perversions that put the entire financial architecture in imminent danger of collapse.

To cite a burning example, the current loanable funds crisis has been caused not only by the government’s level of capital spending being well below forecast (so far only 15% of the allocation), but also by lending irresponsible from the banks themselves. Their greed is evidenced by the “fantastic” level of profit made by exhausting all lending opportunities beyond self-managing liquidity risks. The true extent of their overexposure to speculative sectors like real estate remains largely unknown, even to the regulator. In the long run, the cumulative result of all of this is bound to be suicidal for the entire industry. When private companies in particular engage in unethical practices as such, the free market economy is defamed through no fault of its own. The regulator and the industry must learn at least some lessons from the crisis that the Nepalese economy has already encountered. ]]> Need to revamp the global health agenda right now – The New Indian Express https://futurekomp.net/need-to-revamp-the-global-health-agenda-right-now-the-new-indian-express/ Sun, 30 Jan 2022 19:52:00 +0000 https://futurekomp.net/need-to-revamp-the-global-health-agenda-right-now-the-new-indian-express/

Globally, the Covid-19 pandemic has had devastating effects on economies, putting millions of people at risk. Now is the time to think about initiating reforms in the global health agenda. The WHO faced serious criticism from all walks of life over the handling of Covid and could do little to facilitate the delivery of vaccines to populations in need.

The activities of international health agencies like the WHO are targeted at two different health approaches, one focused on the vertical campaign against the management of specific diseases (e.g. smallpox, malaria, etc.), and the another with a social perspective or a horizontal approach targeting poverty, inequality, … (eg the Alma-Ata declaration with the goal of health for all). These can be qualified respectively as biomedical and social medicine approaches. The biomedical or vertical approach, being a specialist approach, is performed by health workers and may not be successful if there are no permanent health services in specific areas for follow-up. The horizontal approach, like a mass campaign, involves a large part of the population. The allocation of resources by economies plays a key role in both of these cases and therefore these approaches are not mutually exclusive and require coordination and combination in various ways. Thus, WHO may need to draw a clear line on where mass campaigns are successful, taking into account the disease being targeted and the availability of resources.

Another serious constraint to achieving health and development goals is the shortage of health workers and their vital role, especially in the fight against communicable diseases. The WHO in its 2006 health report highlighted a shortage of four million health workers with critical shortages reported in 57 countries, mostly in Africa. He also estimated that 18 million more health workers are needed by 2030, mostly in low- and middle-income countries. The imbalance is more marked in rural areas than in urban areas. The high salary of these professionals in advanced countries pushes them to go abroad. Adverse working conditions, the impacts of climate change and an aging population contribute negatively to this problem.

The vagueness of priorities among a multitude of programs is another major challenge. The prioritization process involves selecting the best option to meet the most important health need. The WHO has identified “universal health coverage” as the most powerful concept public health can offer. Studies from around the world estimate that out-of-pocket payments push 100 million people into poverty each year and that the most effective way to provide universal coverage is to share the costs among the population. Overall, 12.67% of people spend more than 10% of their income (out of pocket) on health expenses. One of the areas where this rate is above average is the Southeast Asia region (India included), where it is 16%. The Western Pacific region comes second in this list. This means that these regions do not have universal health coverage. A strong, effective and well-managed system that meets priority health needs through integrated, person-centred care is the need of the hour. Sustainable health systems that promote universal access to care can be facilitated by appropriate application of digital technologies.

The Covid crisis had laid bare the risks of corruption prevailing in the health sector as well as its fragile systems which threaten its sustainability. The Office of Internal Audit and Oversight report submitted to the World Health Assembly in 2019 reveals that a total of 81% of overall audit findings were rated as “satisfactory” or “partially satisfactory”, suggesting improvements. Compared to 478 fraud, corruption and misconduct cases reported in 2014, 520 were reported in 2019. Identified priority areas for improvement include strengthening implementation, strong vendor management, responding to human resource needs and improving resources for key underfunded programs. It is therefore high time that good governance practices were integrated into this organization.

Recently, multilateralism entered into crisis. There is a decline in commitment to multilateral/UN action after the end of the Cold War and in the current geopolitical climate of rising nationalism. The UN and its agencies are criticized for their lack of efficiency and many other problems. The WHO has also shown its limitations and shortcomings in containing the spread of the virus during the pandemic, and the world has also witnessed political pressure from powerful member states and commercial interests. There are also growing calls for social justice in a context of accelerating economic globalization.

Global health governance encompasses formal and informal institutions as well as norms and processes that directly govern or influence international health policy and outcomes. A multitude of diverse actors are involved in financing global health and have far more resources than the WHO. In addition to international organizations such as the World Bank and WHO, there are multilateral entities (e.g. G8, G20), multilateral global health initiatives (e.g. GFATM, GAVI), international development agencies (e.g. USAID , DFID), bilateral initiatives (e.g. PEPFAR, GHSA), philanthropies (e.g. Gates, Carso, Clinton), global public-private partnerships, private sector-industry and civil society initiatives (e.g. MSF, Oxfam ) that undertake many health financing activities.

Thus, there are various financing actors, fragmented due to lack of coordination and duplication with top-down and donor-driven approaches, which negatively impact countries with fragile health systems. There are a lot of funds flowing into the health sector, but the same is unbalanced in the allocation to “big” diseases (vertical) but not to the health system for strengthening (horizontal). There is also a lack of evaluation, accountability and sustainability, which requires major overhaul and changes in traditional donors and funding models for the optimization of existing health resources.

(Deputy Secretary, Ministry of Finance. Opinions are personal)

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Decision to raise internal loans could worsen liquidity crunch https://futurekomp.net/decision-to-raise-internal-loans-could-worsen-liquidity-crunch/ Sun, 30 Jan 2022 01:31:21 +0000 https://futurekomp.net/decision-to-raise-internal-loans-could-worsen-liquidity-crunch/

As the government struggles to spend its existing resources, it has started to raise internal loans, fueling fears that this will lead to a further shortage of financial resources at banks which are already under pressure to lend due to the lack of of cash.

On Friday, the Nepal Rastra Bank solicited applications from banks and financial institutions and ordinary citizens to subscribe to the Development Bonds worth Rs 10 billion for the second time in less than a week in a bid to raise loans on the domestic market for the government.

The central bank has set an auction date of Jan. 30 for the four-year development bonds.

On Wednesday, the central bank sold 10 billion rupees of development bonds-2024, a debt instrument with a two-year maturity to banks and financial institutions.

According to the central bank, banks and financial institutions had applied for development bonds worth 52 billion rupees.

Even though the government continued to underperform on the expenditure part, the government continued to increase internal lending, which led to hoarding resources with the government.

“The decision to raise internal loans now was made because raising all loans in the last quarter of the fiscal year could disrupt the market,” said Mukti Pandey, head of the public debt management office. “Given weak government spending so far and tight liquidity in the banking sector, we are not increasing lending much in the third quarter.”

The government, through the Replacement Bill, had in September revised its internal lending to 239 billion rupees for the current financial year from the earlier plan to raise 250 billion rupees.

Government spending as of January 27 stands at around 33% while capital spending is around 15%, according to the Office of the Comptroller General of Finance, which maintains records of government revenue and expenditure.

As the government collected the first installment of income tax in mid-January, the public treasury was flooded with money.

Although the Treasury’s cash reserves remained idle, the government failed to channel them into the banking sector. As a result, the private sector finds it difficult to receive loans from banks and financial institutions.

Bankers said they were barely making any new loans.

“We have been very selective in lending as our credit to deposit ratio has been around 90 percent,” said Anil Kumar Upadhyay, managing director of the Agricultural Development Bank. “They are intended for long-term ongoing projects and new projects such as hydroelectric projects.”

However, demand from banks and financial institutions for government bonds – five times larger – on Wednesday raised questions about the reality of the liquidity crisis in the banking system. The demand from banks and financial institutions stood at around 52 billion rupees, while the government said it was issuing bonds worth 10 billion rupees.

“I’m not sure about the liquidity situation in the banking sector after the oversubscription of development bonds,” Pandey said.

The bankers specified that they demanded the government bonds only to manage their liquidities, which they must obligatorily preserve.

“We need to maintain liquidity outside the 90% credit-to-deposit ratio, with 10% coming from deposits and paid-up capital,” Upadhyay said. “Some of the government securities have matured and are maturing and buying new government securities will help adjust the spread once the existing securities mature.”

But bankers also argued that banks could also buy government securities at less than 90% of the credit-to-deposit ratio.

“If liquid funds are available and there is a good rate, banks can also buy government securities at less than 90% of deposits that can usually be lent,” said Nischal Raj Pandey, managing director of Sanima Bank.

He said, however, that this would not seriously affect banks’ ability to lend under normal circumstances, as they can receive a standing liquidity facility from the central bank by depositing the government securities.

Bankers, however, have argued that banks are unlikely to buy development bonds from the portion of deposits that should be used to make loans.

Due to excessive lending in the first quarter of the current fiscal year without paying much attention to collecting deposits, the banking system currently does not have adequate resources to make new loans. Some banks have completely halted new lending while others have been selective in granting loans.

Upadhyay, who is also the chairman of the Nepal Bankers Association, said banks are no longer offering large-scale loans since the banking sector is facing shortages of loanable funds.

The central bank said half of lending in the first quarter was for import financing, which contributed to a massive balance of payments deficit and the depletion of foreign exchange reserves.

Today, the private sector does not even get loans to invest in the productive sector. Due to weak public spending, the flow of financial resources from the public treasury to the banking sector does not occur on a large scale, which contributes to the continued shortage of liquidity in the banking sector.

Citing shortages of loanable funds from the banking sector, the government has delayed lifting internal loans this year.

In the last fiscal year 2020-21, the government had started raising internal loans in early October.

But bankers have said the government should step up spending to deal with shortages of loanable funds.

Finance Minister Janardan Sharma told a meeting of the finance committee formed under the Intergovernmental Provincial Council on Friday that the government would encourage increased spending.

“The government will provide more budget to offices that can spend more,” he said, according to a press release issued by the minister’s personal secretariat.

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Agenda for Economic Recovery and Prosperity https://futurekomp.net/agenda-for-economic-recovery-and-prosperity/ Wed, 19 Jan 2022 02:38:00 +0000 https://futurekomp.net/agenda-for-economic-recovery-and-prosperity/

Sixth, the SAN proposal outlined the Monetary Policy Committee’s approval of the sharing of a portion of the Federation’s US dollar account for a foreign exchange transaction then scheduled for September 2007. But with the federal government’s political choice of permanently suspending the SAN, the MPC remained in the economic woods.

The MPC held its 282nd meeting since its inception in November 2020, but is currently content to applaud every action by the CBN. It is not flattering that, because the prevailing high lending rates discourage businesses from borrowing, the level of bank depositors’ funds and total bank credit to the economy are more or less equal, reflecting the strong unused bank lending capacity.

Overall, according to the World Bank, total domestic credit to the private sector as a share of GDP in 2020 stood at 12.1%, down from 21.2% in 2018 and 21.8% in 2014. By comparison, this indicator for Malaysia, Nigeria’s economic peer, stood at 134.1% in 2020, 143.5% in 2018 and 140.4% in 2014.

Clearly, Nigeria’s prolonged downward economic trajectory shows this. Moreover, while its main roles are suffering, the CBN has increasingly taken over the financial intermediation functions of the depository banks by offering intervention funds at subsidized interest rates for each economic activity and for all company sizes, even with loans for projects worth less than N50,000.00. Note that (a) CBN intervention funds amount to fiat printing additional volumes of naira to inflate the money supply, thereby fueling inflationary pressure. (b) Intervention funds are disbursed through the DMBs, which impose stable fees. However, DMB loans are generally part of the volume of safe inflation limit money supply which should be carefully controlled using cash reserves and liquidity ratios set by the CBN/MPC alongside prudential targets.

For years, the MPC has set a cash reserve ratio and a liquidity ratio that are out of sync with an optimal money supply, thus soaking the system in persistent excess liquidity. This unhealthy situation supported the monetary policy rate in the corridor from 2006. Among other things that hurt the economy, the apex bank and the MPC pay the DMBs the interest rates of the permanent deposit facility ( which varied from 4.5% to 10.0% over a long period) on loanable funds by banks left idle due to unattractive lending rates influenced by the MPR. Indeed, the CBN policies hamper domestic production with a negative effect on domestic employment while promoting the country’s excessive dependence on imports for the benefit of foreign economies. No wonder Nigeria runs heavy trade deficits with foreign countries.

At this point, remember the original sin of poor political choice by the old military regime. He ordered CBN to improperly monetize or even replace accrued liabilities from the Federation account with naira funds printed in fiat. Thus, the apex bank, supposed to be the bank of last resort, usurped the function of the DMBs (the first instance banks) thus triggering the uncontrollable inflationary problems facing the country. Note that despite being replaced by funding funds from the apex bank deficit, the retained FA dollars remained intact and were dubbed the CBN’s external reserves. Successive apex bank governors have allocated the misnamed external reserves arbitrarily at artificial exchange rates across multiple segments of the foreign exchange market to the detriment of the economy.

On the other hand, when currency holders, including government levels, convert their currency holdings through the foreign exchange market in which DMBs (as trial banks) act as currency brokers remunerated at commission, forex end users would buy currencies using naira. funds that are part of inflation deemed safe limit the optimal money supply. This way, naira revenue from FA oil revenue would not be inflationary.

We have shown in previous editorials that a single foreign exchange market (SFM) using the Appropriations Act Exchange Rate (AAR) as the anchor managed floating exchange rate would produce naira/dollar exchange rates reflecting the market in a stable band of AAR +/- 3 percent. The incorporation of progressive tariffs and progressive exchange access tax rates would achieve various desirable economic goals such as a balanced budget, a budget surplus or a low budget deficit. Take for example the latest NBS data showing foreign trade imports in 2021 (to date) from N21. 95 trillion. To annualize this figure, converting it to US dollars at the budget exchange rate and adding invisible trade disbursements to other countries would show that over $100 billion left Nigeria in 2021 for foreign entities. Then assume a FG budget revenue gap of 5 trillion naira. An average forex access tax (FAT) of N50 per dollar spent on imports could be collected through DMBs without recourse to domestic or external borrowing. Note that the forex access fee should be global but graduated according to the defined needs or priorities of the country. Funding for national development should not tolerate any tax exemption. Visualize the benefits. The applicable progressive FAT payable to the government would be much lower than the difference between the rate (I&E) and the BDC rates that manufacturers etc claim to be paying. But this difference is currently going to the intruders, sharks and wreckers of the economy. Thus, any federal budget is entirely achievable.

Concluded.

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“Unless BB controls discretionary forces, no monetary policy will bring the expected results” https://futurekomp.net/unless-bb-controls-discretionary-forces-no-monetary-policy-will-bring-the-expected-results/ Wed, 12 Jan 2022 08:00:00 +0000 https://futurekomp.net/unless-bb-controls-discretionary-forces-no-monetary-policy-will-bring-the-expected-results/

In a working paper recently published by the Asian Development Bank (ADB) entitled “Bangladesh Monetary Policy Transmission Mechanism”, the authors – In Huh and Yoonsoo Lee – found that the traditional monetary policy tools used by the Bangladesh Bank (BB), such as the repo rate and the reserve currency (RM), are not working as expected.

However, the National Savings Bond affects the economy in a manner more akin to that of a monetary tool.

Specifically, a positive shock to the reserve currency should lower the interest rate. In practice, however, as the article shows, a positive shock (BB’s expansionary policy) leads to an increase in the interest rate.

Also, increasing the repo rate (the rate at which banks borrow from Bangladesh Bank) is an example of tight monetary policy because it reduces the money supply and allows the central bank to control inflation under ideal circumstances. But the authors found that shocks to the repo rate had no significant impact on the broad money supply.

To explain these contradictory and counterintuitive results, the study argued that extremely high yield National Savings Certificates (NSCs) crowded out private sector investment and may have distorted the relationship between monetary instruments and their targets. .

The commercial standard spoke to Dr. Saleh Uddin Ahmed, former Governor of Bangladesh Bank, to make sense of the rather baffling findings of the AfDB Working Paper and asked for advice for the days ahead.

TBS: According to the AfDB report, the Bangladesh Bank’s monetary policies are not having the desired effect. Is it true ? Why does this happen?

Doctor Saleh Uddin: This is not entirely wrong. First of all, you have to understand that there is always a lag between the implementation of monetary policies and their impact. Monetary policy changes such as interest rate adjustment, Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR) may take longer than usual to show the desired results.

More often than not, Bangladesh Bank fails to achieve the monetary policy goals it has set for itself. Changes in policy rates often do not have a significant impact on financial markets because they are not sufficiently sensitive to interest rates. This happens because the vast monetary reserve of Bangladesh comprises only 40% of all financial transactions. This is why even a change in interest rates as large as 1-2% may not affect the economy in the way BB predicts.

Moreover, monetary policy is always less effective than fiscal policy. I once argued that BB should stop focusing on policy rates and should instead focus on the proper implementation of its regulations and the compliance of private financial institutions with those regulations. Unless the private banks comply with the policies introduced by BB, the policies will never have the intended effect.

TBS: The AfDB study also asserts that the growing dependence on National Savings Certificates distorts the effects of monetary instruments? Is it true? How to solve this problem ?

Doctor Saleh Uddin: National savings certificates are high-yielding because the interest rates are much higher than bank rates. But those who buy NSCs are generally not big investors. At best, they can buy for 30 lakh Tk from NSC. Large investors do not invest through NSCs.

So, ideally, NSCs primarily serve as a government fiscal policy tool to provide a sort of safety net for the middle class, as well as the marginalized, instead of acting as a capital investment instrument.

However, this does not mean that its impact on monetary policy is insignificant. But I think it is not enough to distort the effects of monetary policy. There is a more systemic issue at play here which involves corruption, mismanagement and discretionary powers.

TBS: The AfDB study recommends that the development of a robust bond market would improve the market for loanable funds. How do you rate these recommendations?

Doctor Saleh Uddin: The development of a bond market is, without a doubt, essential for a more responsible investment environment. Globally, most investments are made either in the capital market or in the bond markets. Banks generally have an upper exposure limit beyond which they cannot and should not lend to protect public money from undue risk exposure.

But in the absence of a robust bond market and an underdeveloped stock market in Bangladesh, private banks lend beyond their exposure limits, leading to the crisis in which Bangladesh finds itself. currently our financial sector.

In addition to the development of a bond market, borrowing needs should be linked to equity held in the form of bonds, particularly in the case of large investments. In other words, one cannot contract a certain amount of loans without holding a threshold of equity. Simultaneously, Bangladesh Bank must also improve its aural prowess and financial management of the banking sector. A robust bond market, along with a well-managed capital market, has the potential to establish accountability in the loanable funds market.

TBS: The AfDB study also recommended that Bangladesh Bank pursue an interest rate-centric monetary policy, instead of the typical supply-centric instruments. What would be your recommendation?

Doctor Saleh Uddin: First, the Bangladesh Bank needs to ensure that the financial system, as well as the money market, is formalized. Most financial transactions currently take place informally. People take out loans from local loan sharks, pawnbrokers, relatives or friends instead of going to the formal money market. This is why monetary instruments appear inefficient.

The introduction of interest rate-centric instruments would also have a similar result unless the vast majority of financial transactions take place in the formal money market. And to ensure this, Bangladesh Bank must ensure financial inclusiveness to bring people into the formal money market. While mobile financial services have made progress in engaging marginalized rural communities, banks still have a long way to go.

TBS: What would be your general recommendation to the Bangladesh Bank to improve the effectiveness of its monetary policy?

Doctor Saleh Uddin: In short, Bangladesh Bank should not blindly follow the conventional monetary policy instruments followed in the UK or the US. Bangladesh Bank must first assess how its policy rates affect different sections of society differently. For example, how the same policy rates can affect large and small investors differently. Based on its assessment, it can set up blended policy rates, such as different interest rates for investors with different levels of capital.

More importantly, it is high time for the central bank to put an end to corruption and discretion. There is a discourse about “rules versus discretion”. Unless you follow the rules, discretion becomes the norm and most financial transactions in Bangladesh are executed by discretion. Unless BB addresses these discretionary forces, no monetary instrument will be able to deliver the desired results.

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Nigeria’s crippling Forex manufacturing shortage https://futurekomp.net/nigerias-crippling-forex-manufacturing-shortage/ Sun, 09 Jan 2022 02:40:52 +0000 https://futurekomp.net/nigerias-crippling-forex-manufacturing-shortage/

Members of the Organized Private Sector (OPS) and other stakeholders in the national economy urged the federal government, through the Central Bank of Nigeria (CBN), to take action on the challenges faced by manufacturers to access currencies.

They also begged the government to sponsor local software developers instead of importing solutions or software from China and other countries.

PAHO, comprising the Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce, Industry (LCCI) and others, in various interviews with LEADERSHIP on Sunday, said the government needs to improve the access to foreign currency for the importation of machinery and raw materials in order to boost local production and support the fragile growth of the country.

President of MAN, Ing. Mansur Ahmed, said manufacturers are struggling to stock up on foreign currency for importing machinery and raw materials that are not available in the country.

“We request the intervention of the President to ensure the prioritization of the allocation for the purpose of importing raw materials and vital machinery and equipment that are not locally available.”

He said manufacturers are still grappling with an inadequate electricity supply from the national grid and high electricity tariffs from distribution companies, coupled with the massive cost of providing alternative energy at more than $ 72.7 billion. naira, thereby limiting the competitiveness of manufacturing in Nigeria.

Ahmed noted that the limited access to long-term loans and the high cost of loanable funds also jointly restrict the sector’s ability to produce at full capacity and negatively affect the contribution of manufacturing to gross domestic product (GDP).

Setting an agenda for policymakers and economic managers for 2022, Center for the Promotion of Private Enterprise (CPPE) CEO and outgoing LCCI CEO Dr Muda Yusuf said the macroeconomic situation is one element very important to the business environment as it has a considerable impact on investor confidence, adding that it has implications on costs, profits, competitiveness and sustainability of investments.

He called on the government to tackle four key macroeconomic variables: inflation, the exchange rate, GDP growth and the trade balance.

Inflationary pressure remains a major concern for both businesses and households, according to Yusuf, as it remains high.

According to him, “in order to fight inflation, we must tackle the main drivers of inflation in 2022: increasing the productivity of the economy to stimulate output growth; stem the depreciation of the exchange rate of the naira; fight against illiquidity in the foreign exchange market and fight against insecurity, among others.

He added that for the economy to support GDP growth, it is important to create an environment conducive to positive investor sentiments in the economy, which should be guided by policy, regulation, macroeconomic conditions and security. of life and property.

Meanwhile, in an exclusive interview with LEADERSHIP on Sunday, the President of the Institute of Software Practitioners of Nigeria (ISPON), Mr. Chinenye Mba-Uzoukwu, said that over the years the Nigerian government had failed not been able to fully deploy local solutions to local problems, with the country depending on foreign countries for solutions.

Mba-Uzoukwu revealed that Nigeria as a country is blessed with excellent software developers who have come up with several solutions to local problems, but the government sometimes does not hang out with them because they prefer to import solutions or software. from China and other countries. .

This implies, according to the president of ISPON, that if this trend continues, the country will experience a brain drain in the ICT sector, as a majority of young innovators now go to other countries where their talents will be much greater. appreciated.

To change the narrative, Mba-Uzoukwu said, the Nigerian government and the private sector should start sponsoring local software developed by Nigerians. This, he stressed, will not only help retain the nation’s talents in the country, but also increase its foreign exchange reserves.

“We cannot depend on America or Germany to always come and solve our local problems for us. The government needs to look inward, work with our local software developers to solve some of the problems in the ICT sector and in Nigeria in general, ”said Mba-Uzuokwu.

For his part, cybersecurity expert Hakeem Ajijola said Nigeria’s ICT sector is one of the largest in Africa.

To maintain this position and even do much better this year and beyond, Ajijola said the government must continue to develop literacy, although he urged the government to embark on continuous capacity building and provide an environment conducive to the prosperity of SMEs, by signing the start- the bill into law.

Another area the government should be looking at is overregulation and “too much control of the ICT sector,” Ajijola says.

“We saw it in the ban on Twitter which resulted in huge losses for the Nigerian economy. Certainly there is a need for rules, regulations and enforcement, but it has to be smart rules, smart enforcement, ”he added.

Ajijola also called on the government and its agencies to focus more on broadening and deepening the ICT sector and not just on Internal Revenue Generation (IGR), adding that IGR is not the only one way to measure success.

For Professor Akpan Ekpo, former Director General of the West African Institute for Financial and Economic Management (WAIFEM) and President of the Foundation for Economic Research and Training, it is urgent that the government in 2022 implement in a manner aggressive national development plan.

According to him, this would lead to an increase in the influx of foreign investors into the country as well as the development of the local economy and the overall growth and development of the country.

“In 2022, we should start aggressively implementing the National Development Plan 2021-2025 (PND), and in this context, we should start repairing the power supply so that micro, small and medium enterprises ( MSME) can develop well and create jobs.

“In addition, the insecurity in the country is becoming unbearable because it scares investors away. When we say that the GDP is increasing, it is jobless growth. So the government needs to fix the power and the security and all of these things are in the NDP, and they are expected to implement it in the first two quarters of 2022.

“If they do, they can win back the trust of Nigerians and investors who want to come to the county, build factories and employ people. Right now, people have lost faith in government, but if they can do these two things and people can move around easily and do their business easily, they will regain the lost trust, ”he said. underline.

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MAN calls for government support to overcome constraints https://futurekomp.net/man-calls-for-government-support-to-overcome-constraints/ Tue, 04 Jan 2022 04:06:12 +0000 https://futurekomp.net/man-calls-for-government-support-to-overcome-constraints/

Through Merit Ibe

the The Manufacturers Association of Nigeria (MAN) has requested support from the federal government to overcome the constraining constraints on competitive manufacturing in the country.

The association’s president, Mansur Ahmed, made the appeal during the advocacy visit to President Muhammadu Buhari recently, where he listed the challenges facing the sector, including, but not limited to, procurement. insufficient foreign exchange, electricity, the impending increase in the tax rate, limited access to long-term funds, low footfall of products made in Nigeria, among others.

Hailing the president for the many initiatives, reforms and policies that have helped stabilize the price of manufacturing, Ahmed added that the government, however, must maintain the implementation of policies that have helped the economy recover quickly from recession, to survive the onslaught of COVID. -19 and relaunch other initiatives which suddenly fell into disuse.

He noted that MAN expects the government to continue to make manufacturing a centerpiece of its economic agenda and the catalyst for increased domestic production, employment and wealth creation.

Ahmed who praised the progress made in infrastructure development; various reforms on the ease of doing business and exemplary leadership in limiting the spread of COVID-19, highlighted that manufacturers continue to struggle with an inadequate electricity supply from the national grid and high electricity tariffs for consumers. distribution companies, associated with the enormous cost of providing alternative energy to more than N72.7 billion.

This, he said, limited the competitiveness of the manufacturing sector. “While commending the government for the ongoing reform in the electricity sector, we implore Your Excellency to order that NERC remove all bottlenecks preventing manufacturers from accessing the Eligible Customer Program.”

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Regarding poor long-term access, Ahmed said that limited access to long-term loans and the high cost of loanable funds also restrict the sector’s ability to produce at full capacity and negatively affect manufacturing’s contribution to domestic product. raw.

He recommended that a monitoring and evaluation platform involving the private sector be put in place to oversee the allocation of these funds to ensure that the funds are wisely allocated to genuine manufacturers who need the incentives. .

MAN boss urged government to urgently establish the designated competent authority that will oversee the administration of rules of origin and commission the automation of certificate of origin, export and import documentation processes for the African Continental Free Trade Area Agreement (AFCFTA), transactions.

Regarding the impending tax rate, he said the affected sub-sectors are currently moaning under multiple taxes, levies and fees from different levels of government and the disposable income of the average Nigerian is already eroded, causing a high inventory of products. unsold manufactures. While acknowledging that the government must generate funds to meet its growing social and economic obligations, he felt that it is the tax base that should be broadened to capture the untaxed.

“Genuine and diligent corporate taxpayers should not be overburdened, as this could be counterproductive and the envisioned revenue increase may not be achieved. “

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Economic recovery: some glimmers of hope but still a long way to go – myRepublica https://futurekomp.net/economic-recovery-some-glimmers-of-hope-but-still-a-long-way-to-go-myrepublica/ Sat, 01 Jan 2022 00:28:32 +0000 https://futurekomp.net/economic-recovery-some-glimmers-of-hope-but-still-a-long-way-to-go-myrepublica/

The year 2021 was decidedly not as gloomy as the year before in terms of freeing the economy from the clutches of the COVID-19 pandemic. Economic activities accelerated as the spread of the coronavirus gradually slowed. The signs are positive but the economy could sink into a crisis if corrective measures are not implemented on time.

The Nepalese economy, which was heading towards recovery at the end of 2020, following a decline in the impacts of the first wave of the coronavirus, was faced with the second wave of the pandemic towards the end of April 2021. Activities were paralyzed again for months. This has brought down a number of macroeconomic performance indicators, mainly those related to the external sector, raising the question of whether the current situation is a “pre-cyclonic watch” for the impending economic crisis in the country.

Throughout 2021, the sharp fluctuation in bank interest rates, the worsening of foreign currency reserves with the deterioration of the balance of payments (BoP), the surge in consumer inflation, the tightening of liquidity in the banking system, rising government borrowing, widening trade deficit and volatility in the stock market have all come into the limelight. Experts stressed that the situation calls for the implementation of appropriate public policies. However, there are some indicators that the economy is gradually improving.

After the first foreclosure imposed in March 2020, the economy still has not felt the heat mainly due to the cushion of a growing influx of remittances, the main source of the country’s foreign exchange earnings that largely fund the landlocked economy based on imports. Just after a year of the first wave, remittances began to chart a downward trend, putting pressure on the country’s foreign exchange reserves.

Nepal Rastra Bank (NRB) records show that in January 2021, foreign exchange reserves with the country stood at US $ 12.78 billion, sufficient to cover potential merchandise imports of 13.9 months and imports. of goods and services for 12.6 months. As of mid-November 2021, the country is left with foreign exchange reserves of $ 10.47 billion, which can finance imports of goods and services in just 7.2 months.

According to Nara Bahadur Thapa, former executive director of NRB, Nepal need not worry unless the foreign exchange reserve is enough to support imports for seven months. “However, if it is declining rapidly each month, it should be a matter of concern and calls for effective government policies,” Thapa said.

Keshab Acharya, former economic adviser in the finance ministry, said the problem occurring in the external sector will certainly create a ripple effect on the domestic sector of the economy.

Over the past almost six months, the country’s banking system has suffered from a shortage of loanable funds that bankers have blamed in large part on the central bank’s shift to providing deposit-credit (CD) to credit-to-deposit ratio. capital base plus deposit (CCD), slowing government investment spending and lower remittances. NRB data shows that aggressive lending by banks and financial institutions (CIBs) against slow deposit collection has been the main cause of the current liquidity shortage.

At the end of December, the total deposits with CIBs reached 4.81 trillion rupees while they provided loans of 4.61 trillion rupees. Due to an excessive flow of loans, the CD ratio reached 91.02%, which was well above the ceiling set by the central bank of 90%.

Because of this, many banks have already stopped issuing loans to potential investors, which economists say has created the risk of an economic downturn. Experts said the lack of loan flow will also affect the government’s goal of achieving economic growth of seven percent. Acharya said the inability of banks to provide loans could have a detrimental effect on economic growth, as economic activities slow down when there is not enough liquidity in the market.

Rameshwor Khanal, former finance secretary, however, ruled out the possibility of an economic recession due to the inability of CIBs to provide loans to the private sector. “In the post-pandemic period, the private sector has taken out excessive lending, which is of course a positive indication as it could help increase aggregate demand while boosting supply,” Khanal said.

NRB records show that there has been a significant increase in bank loans to manufacturing and service industries despite a slow increase in outstanding loans to agricultural production. If central bank records are anything to consider, CIB’s loan portfolios, given lending on imports of consumer goods to the limit, will show positive results in the future, experts say.

Over the past year, Nepal’s trade deficit has widened from Rs 600.45 billion to Rs 735.48 billion (in mid-November), despite the country making a notable gain in revenue export. “It will work better if the spending is made for imports of capital goods,” Khanal said.

During the period, slow growth in revenue collection against a backdrop of increasing government spending increased government deficit financing. Government records show that the public debt has exceeded 1.7 trillion rupees, which represents about 40% of the country’s GDP. The World Bank has predicted that Nepal’s public debt-to-GDP ratio could reach 50% by 2024. Although it is an obligation for a country like Nepal to finance the majority of development projects through Public borrowing, an increase in its amount at an alarming rate, seen at present, is likely to take a toll on the economic progress of the country.

NRB data shows that the government has also failed to control price increases in consumer goods. The consumer inflation rate crossed five percent from around 3.56 percent during the review period. High inflation could cause Nepalese consumers to cut spending while affecting private sector investment, which would be disastrous for a recovery.

Finance Secretary Madhu Kumar Marasini said the surge in demand after a drop in the impacts of the coronavirus has led to a sharp increase in imports and negative impacts on the country’s BoP. According to him, the government has already started implementing policy measures to cope with the BoP, foreign exchange reserves and remittances as well as injecting the necessary amounts to increase liquidity in the banking system. “We may have to wait a few more months to see the positive results of the impacts of government policies,” Marasini added.

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How investment projects suffer from an overburdened civil service – Blueprint Newspapers Limited https://futurekomp.net/how-investment-projects-suffer-from-an-overburdened-civil-service-blueprint-newspapers-limited/ Fri, 31 Dec 2021 15:14:35 +0000 https://futurekomp.net/how-investment-projects-suffer-from-an-overburdened-civil-service-blueprint-newspapers-limited/

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With recurrent spending swallowing up the bulk of annual budget allocations, many fear that the execution of investment projects will continue to suffer for a long time; BENJAMIN UMUTEME looks at development.

For several decades Nigeria continued to suffer from an infrastructure shortage caused in part by declining income and mainly by a lack of a maintenance culture. And with governments preferring to spend more on recurrent spending than on repairing the country’s dilapidated infrastructure, authorities are forced to borrow from outside sources to finance projects.

A report released by Moody Investors Services indicated that Nigeria would need to spend $ 3 trillion per year over the next 30 years to close its infrastructure gap.

However, as Nigerians grapple with the challenge of basic infrastructure, there are concerns about the disparity in the proposed allocations for capital spending and recurrent spending in the country’s annual budget.

Recurring expenses are expenses for goods and services that do not lead to the creation or acquisition of fixed assets. Rather, it is mainly the expenses incurred for the day-to-day running of a business or public institutions that cover ministries, departments and agencies (MDAs) as they are called in Nigeria. To this extent, recurrent expenditure includes expenditure made for the payment of overheads, salaries, interest payments, grants, transfers, pensions and gratuities, among others.

From an estimated 2.13 billion naira in 2009, recurrent spending by the Nigerian government increased to 3.33 billion naira in 2012.

Huge imbalance

A review of budget forecasts and allocations showed that recurring funds have always had the upper hand over capital projects. Between 2016 and 2021, the figures collected by Master plan weekend showed that in 2016, in a budget of 8.06 trillion naira, 2.65 trillion naira became recurrent while the capital obtained 1.59 trillion naira. In addition, in 2017, the trend did not change because out of a total sum of 7.28 billion naira, the recurrent ones received 2.9 billion naira and 2.24 billion naira went to the capital.

Between 2018 and 2021, when total expenditure was 91 trillion naira, 8.92 trillion naira, 10.59 trillion naira and 13.08 billion naira respectively, recurrent expenditure was 2.99 billion respectively. billion naira, 3.5 trillion naira, 4.49 billion naira and 4 naira. 88 trillion. Juxtapose that with a capital allocation of 2.3 trillion naira, 2.8 trillion naira, 2.47 billion naira and 3.08 billion naira during the period under review and it will be obvious why Nigeria’s infrastructure is what it is.

Analysts continued to question the imbalance in allocations between capital spending and current spending. The imbalance was even worse under President Goodluck Jonathan’s previous administration.

They further noted that once said amounts are allocated, actual rejections become a challenge. This was further exacerbated by the drop in revenues caused by OPEC + production cuts, the theft of crude oil and Covid-19.

Further details gathered by this reporter showed that 3.1 trillion naira was spent on recurrent non-debt spending. Further examination would further reveal that of this amount, personnel costs swallowed up 2.09 trillion naira.

Further analysis showed that the sum of 197.77 billion naira was spent on pensions and gratuities between January and December 2018. Likewise, the sum of 218.8 billion naira was spent on overheads between January and December 2018, out of the budgeted amount of 246 naira. 49 billion, while the service-wide votes had a total expenditure of 237.6 billion naira allocated to this spending subtitle in 2018.

For the presidential amnesty program, the federal government has released 59.64 billion naira out of the budgeted sum of 65 billion naira, while a special intervention program and an electricity sector reform program have been released. had 271.79 billion naira and 27.62 billion naira out of the budgeted amount of 350 billion naira and 193.34 billion naira, respectively.

Question marks, expert advice

The recurrent government spending, which continues to rise, drew numerous complaints and criticisms from the population who argued that the government was a waste and that the money it was spending on servicing the components recurring government funds should have been allocated to investment projects.

Expressing concerns over the increase in recurrent spending, Federation Budget Office Director General Ben Akabuaze admitted that the cost of governance was becoming unsustainable.

“The cost of governance has generally increased; MDA’s real current expenditure increased sharply from 3.61 trillion naira in 2015 to 5.26 trillion naira in 2018 and to 7.91 trillion naira in 2020.

“This excludes the costs of public enterprises and transfers to the National Assembly, the National Assembly and the National Council of the Judiciary. Recurrent spending represented over 75 percent of MDA’s actual spending between 2011 and 2020, ”he said.

Interestingly, experts have repeatedly pointed out that high recurrent spending is responsible for the country’s current debt.

In a conversation with this reporter, political economist and development researcher Adefolarin Olamilekan said that the fact that the tax authorities had not made more arrangements for capital spending was at the root of the frenzy. current loans and borrowings from the administration of President Muhammadu Buhari.

He said: “It is interesting to note that recurrent government spending in Nigeria is seen as a bigger obstacle to the realization of investment projects. The reason is that there is no match between what is on the ground right now and what is budgeted. Again, recurrent spending had not had a positive impact on economic growth in Nigeria as expected. Meanwhile, the efficiency of the public sector, especially compared to the private sector, cannot be overstated. In Nigeria, the public institution in Nigeria provides superfluous services, wasting personnel and capital, which could be directed to production that provides welfare and benefits to individuals in the economy.

“Fundamentally, investment spending in infrastructure and productive activities should contribute positively to economic growth, while recurrent spending in our climates remains public consumption spending that retards the growth of infrastructure investment. As might be expected, the Nigerian government was supposed to control the economy using public capital spending. This instrument of government control promotes economic growth in the sense that it attracts public investment by contributing to economic growth and expansion of businesses that generate jobs, wealth and better opportunities and income for the government.

For economist Pat Utomi, the role of inflation and the devaluation of the Naira in raising current spending should not be underestimated.

“I think it’s important to keep in mind that the real value of our currency has gone down and inflation has been significant over the past two seasons.

“So in reality if you look at that amount of money today compared to the actual value of the naira in 2016, it’s not the same amount. Basically, it takes more naira to do the same thing today. ‘hui than in 2016, ”he said.

Additionally, a senior lecturer in the Department of Economics, School of Management and Social Sciences, Pan-Atlantic University, Dr Olalekan Aworinde, has linked the development to rising wages and possibly the upcoming elections to huge recurrent spending.

He said: “The increase may suggest that the government wants to employ more people and has to pay these people with these huge funds allocated to pay wages.

Break the circle

Olamilekan believes the way forward is for the government to reconsider the recommendations of the Oronsaye report on civil service reform in order to break the vicious circle.

He told the reporter that in order for the government to get a correct productivity matrix, it must look for a way “to allocate more funds for investment projects at this stage of our national life.”

“As a vehicle that opens the door to increased infrastructure development that will fundamentally transform Nigeria’s well-being. To me, not having better funded our capital spending is the bane of the current excess lending and borrowing frenzy of the APC Buhari administration today.

He suggested that in order to achieve a balance, the government must “first focus on eliminating the functions of redundant and duplicate agencies through a merger.”

“Second, we need to consider greatly the role of civil servants and civil servants in national development, and above all justify its structure, function, overheads, payroll and service delivery.

“Third, we need to define the role of state government and local governments in managing the national development process with respect to the investment project.

“Finally, it is imperative that the Buhari administration and future governments recognize the urgency of cleaning the Aegean stable from the scraps of our public service as a model for achieving an ineffective government trade mechanism.”

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