The possibility for fiscal gaps between expected revenue of a nation and proposed expenditure, leaves government to choose between debts or compromising microeconomic stability either by printing more money or by increasing taxes please include a literature proof for this statement here. When confronted with this deficit, government often settle for debt; since they believe debt financing allow the country to explore investment opportunities for a longer period while attempting to create a positive investment (Ogunmuyiwa, 2011).page numbers should be included in citation For several decades, Nigeria, one of the most populous African countries has continued to rely on debt financing for economic growth leaving its annual budget in the brisk of heavy debt obligations and doubtful economic growth and development. With its current debt burden, it has become very vital to take a closer look at the debt status of Nigeria with a view to proffer sustainable debt investment strategies.
National debt must be repaid and serviced. In any economy, whether sustainable growth and development is going to be attained or not depends largely on policies and dedication towards meeting own savings requirements. While economist believe (?) in the possibility for gaps in macroeconomic targets and debt as a source of capital for these inadequate financial resources, government must keep the need to raise consumption and investment subjected to its ability to sustainably grow without reducing the growth chances for the coming generation (Sulaiman & Azeez, 2012).
Investigations such as (Umaru, Hamidu, & Salihu, 2013) and (Okonjo-Iweala, Soludo, & Muhtar, 2003) have shown clear relationship between foreign debts and economic growth in Nigeria and some selected African countries, but have not effectively shown how justifiable or productive some of the government expenditures are. According to IMF, the current external debt burden of Nigeria stands at USD 33Billion which is almost 80% of its reserve and requires USD 5.45Billion in annual servicing. With the desperation for economic growth by continuous loans, If the current debt investment and strategies in Nigeria is not reassessed, the expected returns on capital investments will never come. The debt burden would instead grow to require more debt financing. Even though there are proven economic models that budget constraints must be circumvented and the ability of debts to propel economic growth is no longer the question, there are questions as to:
RQ1: What is the appropriate extent or nature of debts that can help Nigeria avoid debt burdens? Eventually better: over-indebtness or unsustainable debt?
RQ2: Since financial capitals increase investments positively, why has debt financing not impacted sustainable economic growth in Nigeria?
RQ3: What debt strategies and channels will be effective to manage Nigeria’s present and future debt obligations?
CONTRIBUTION AND APPLICATION
Debts are incurred by government, but they become public debts. As much as policy makers claim that debts are borrowed in the interest of all and sundry, there are always contradictions as to what makes up individual and collective interests. While debts can be used productively when spent on assets for national development such as building refineries, factories and creating employment, some nations also borrow to finance wars, accommodate extravagant lifestyles of a few government officials, and become dead weight on the economy (Udoka & Anyingang, 2010). This paper will research extensively into the components of Nigeria’s public expenditures and investments with a view to identify unproductive debt investment. Without a distinct research like this that would comprise debt figures, debt expenditures and debt strategies, it may be difficult to answer the open questions in previous research into the Nigerian debt profile.
Economic growth is not weakened simply because a country is indebted. However, the failure of indebted nations to repay debt obligations or find an efficient balance between the extent, nature, and structure of debt (Atique & Kamran, 2012). This paper will help find this balance and suggest the appropriate economic investment for servicing and reducing existing debt burdens to complement existing research. That is ambitious. Better: try to provide hints how to…
Pages: 52 Double spaced(14300 words)
Style and sources: APA7, 1 source
Free extras: Outline/Title page/Bibliography / Reference page
Study level: Undergraduate
Assignment type: Thesis
Subject: Business and Economics