After debt loads surged last year amid the pandemic, governments now must take care to ‘calibrate’ spending, the IMF said Wednesday.
Global debt in 2020, including public and private borrowing, “jumped by 14 per cent to a record-high $226 trillion,” according to the International Monetary Fund’s Fiscal Monitor report.
Public debt amounts to $88 trillion, close to 100 percent of GDP, and is expected to decline only gradually, said Vitor Gaspar, director of the IMF’s Fiscal Affairs Department.
But there is a risk excess private debt will become public debt so “countries will need to calibrate fiscal policies to their own unique circumstances,” Gaspar said in a blog post about the report.
Massive public support helped to soften the economic blow from the pandemic, as well as the health impact.
Huge aid packages in the United States and Europe “could add a cumulative $4.6 trillion to global GDP between 2021 and 2026 if fully implemented,” Gaspar said.
In advanced economies, with progress on containing the virus, spending is shifting away from the immediate crisis, towards green and digital policies and the effort to “make economies more inclusive.”
For example, US budget proposals “aim to reduce inequality and could cut poverty by nearly one-third,” he noted.
But emerging markets and low-income developing countries “face a more challenging outlook” and “long-lasting negative impacts,” as falling tax revenues due to the ongoing crisis will leave little room for investing in development, he said.
He repeated the IMF call for continued support for the poorest nations dealing with high debt loads.
“While recognizing that the international community provided critical support to alleviate fiscal vulnerabilities in low-income countries, more is needed,” he said.
The Indian rupee has hit a record low against the dollar despite recent efforts to prop-up the currency. On Wednesday India’s central bank put further restrictions on the amount of money that companies and individuals can send out of the country.
That had little impact and the rupee fell to 62.03 to the dollar, below its previous low of 61.80 hit on 6 August. Overseas investors have been pulling money out of Indian shares and debt on concerns over the economy.
According to official data, international investors have withdrawn $11.58bn in shares and debt from India’s markets since the beginning of June.
India’s economy had been growing at a fast clip, reaching annual growth of 9%. In recent months, it has seen a sharp decline largely because of a slowdown in its manufacturing and services sectors.
“There is a complete lack of faith in the markets. There are fears that the RBI (Reserve Bank of India) measures may not help improve the rupee,” said Param Sarma, chief executive with NSP Forex.
Indian authorities are concerned that the weak rupee is stoking inflation.The nation relies on imports of crude oil, chemicals and some foodstuffs, which are priced in dollars.
The weak rupee makes those more expensive, a cost that is eventually handed on to the consumer.
In July, India’s main gauge of inflation, the Wholesale Price Index, was 5.79% higher than a year earlier, up from 4.86% in June
Some weeks ago, Channels Television reported on the point of no return in Esuk Mba Community, Akpabuyo Local Government Area of Cross River State and promised to bring another report on a practice, still in Esuk Mba, traceable to the 18th century which is still in existence.
Part two of the Esuk Mba story, takes us to the trade by Barter Market, where this form of exchange has refused to evolve irrespective of the importance attached to the Nigerian currency note in our contemporary times.
The Esuk Mba trade by barter market was a focal point in Nigeria’s dark era of slave trade which made delivery of about 30 percent of the total slaves shipped out of the country at the ‘point of no return’ through a bush track behind the market.
Many decades after the abolition of slavery, the Esuk Mba Market is still standing and plays host to traders from the neighbouring states and communities who bring in, the proceeds from their farms in exchange of what they do not have, but need at the moment.
Other products exchanged at the market are sea foods like the periwinkle popularly known as ‘Enfee- in efik language, crayfish, fish, fruits and other produce.
The market is a weekly one, it holds every Saturday from 7am and terminates at 10am for the barter section and on a day like this, you can be sure of getting value for what you are exchanging for.
Ambrose Akpanika, an elder statesman and a High Chief of the Calabar Kingdom, traced the root of this practise and its economic stability factor in the Nation’s currency.
Years after spending millions of Naira on campaigns and migration of the nation’s currency from paper prints to polymer notes, the Central Bank of Nigeria (CBN) has announced that it is ready to stop the printing of small denomination naira in polymer notes.
The deputy governor, banking supervision, Tunde Lemo, in a statement on Sunday said the apex bank decided to scrap the polymer notes because they fade easily, despite earlier experiments which showed that the notes could last longer than paper notes.
Mr Lemo adds that no new polymer note is being printed at the moment and the CBN will begin to produce the second generation of lower denomination notes sometime between June and July this year.
The CBN deputy governor also appealed to Nigerians to be more careful in handling the naira notes, stressing that its campaign against the abuse of the currency has not been successful.
Mr. Lemo, further explained the new policy disclosed this in an interview in Washington on the side lines of the on-going Spring Meeting of the World Bank and the International Monetary Fund.
“By the middle of the year, we will start to produce the second generation of lower denomination notes, now in paper and not in polymer. My plea is that Nigerians should exercise patience; it wasn’t the fault of the CBN; it was just because we had to go back to the drawing board to rethink the ‘Project Cure’ in the light of the wish of the public that we should not go ahead with the N5,000 notes and lower denominations” he said.
“We will correct that in the course of the year. Polymer certainly will be phased out. In fact, we are phasing out polymer. No new note is being printed in polymer now.”
Lemo stated that when the CBN was going to introduce the polymer currencies, its research showed that they could last longer than ordinary paper notes. “However, with the benefit of hindsight, we probably should not have dumped polymer because, yes, the substrate lasts longer, but the in-consubstrate began to fade; we didn’t realise that at the time of introduction.”
“So, part of ‘Project Cure’ was actually to move away from polymer substrate to paper; unfortunately, we had a push-back because of the issues around N5,000 note and coins.
“The entire programme was put in abeyance; otherwise by now, we should have stopped producing polymer.’’
Lemo said the CBN had awarded a contract for the printing of the higher denomination notes to a foreign company because of low capacity at the Nigerian Printing and Minting Company.
He said the bank would begin to receive the fresh notes from June.
On the campaign for careful handling of the Naira, Lemo said that it was unfortunate that it was not successful, but noted that it was a criminal act to abuse the Naira going by the CBN Act.
The deputy governor said, “Unfortunately, CBN is not a law enforcement institution; we left that in the hands of the law enforcement institutions and that has not kicked in.
“I still go to parties and see people spraying money, stepping on money, I see touts distributing mint-fresh money that should go to customers.’’
Lemo also said that the CBN had talked to the police to step up surveillance to reduce their abuse of the naira, adding that the bank had no right to arrest people who sold the currency on the streets.
He said the act of abuse and sale of the naira by touts had defeated the clean note policy of the bank, but assured that efforts were being made to tackle the problem.
Northern Islamic militant group, Boko Haram has released a video of a French family of seven kidnapped last month in Cameroun.
A man in this video who resembles past images of the person previously identified as Abubakar Shekau says in Arabic that the kidnapping of the French family was carried out because of the arrest of Boko Haram members of their family members in Nigeria and Cameroun.
“God sent us the French hostages …,” he says in what is called a message to the presidents of Nigeria, Cameroun and France.
In his words: “the proof that we are holding them is that our brothers and sisters were captured in Nigeria and Cameroun … We seek no money but the release of our brothers.”