Three strategies have been provided by Bismarck Rewane, the managing director and chief executive officer of Financial Derivatives Company Limited, for Nigeria to escape the debt cycle.
The three choices are requesting a policy support instrument from the International Monetary Fund, debt conversion, and debt restructuring.
When put into action, he claimed, the three proposals can assist the nation in reducing its mounting debt.
The possibilities were described in the most recent Financial Derivatives Monthly Economic Update by Rewane, who is also a member of the Presidential Economic Advisory Council.
He claims that the PSI option enables the IMF to offer policy advice and help to Nigeria in the form of knowledge and direction about economic strategies.
“The PSI is intended to provide a flexible and tailored approach to policy support, with the goal of helping the country develop and implement sound economic policies and promote sustainable economic growth.“The PSI will necessarily usher in the implementation of critical reform policies such as exchange rate reforms, subsidy and pricing reforms, and other market reforms aimed at removing production impediments and increasing public revenue.
Debilitation Of Naira To 470 In 2021 – Rewane
“The PSI will help Nigeria meet the ‘conditionalities’ for a talk with its creditors. A sovereign debt restructuring can take several forms, depending on the severity of the country’s financial situation and the willingness of its creditors to negotiate. Some possible forms of debt restructuring include debt cancellation, debt restructuring, and debt conversion,” he said.
On the debt restructuring option, Rewane said, “This is not necessarily a separate option from the PSI, but remains feasible because sovereign default is a kiss of death and, thus, not an option”.
He added, “A sovereign debt restructuring can take several forms, depending on the severity of the country’s financial situation and the willingness of its creditors to negotiate. Some possible forms of debt restructuring, include debt cancellation, debt restructuring, and debt conversion,”
On fiscal consolidation as another option, he said, “Fiscal consolidation involves difficult choices that eventually have significant social and economic impacts.
“In the end, doing nothing is not an option. The new administration must make the hard choices to save the economy from collapse. Flagrant violations of the Fiscal Responsibility Act must be discontinued.”
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