NATIONAL OR PUBLIC DEBT AND WHY GOVERNMENT BORROW MONEY

NATIONAL OR PUBLIC DEBT AND WHY GOVERNMENT BORROW MONEY

Meaning: National or public debt refers to the debt a country owes to its citizens or other countries or organizations such as the International Monetary Fund (IMF) and the World Bank.

The debt which a country owes i its citizens is known as internal debt while the debt owed foreign governments and organizations is known as external debt.

Instrument or sources of government borrowing in Nigeria

The government of Nigeria can use the following instruments to borrow money. These include:

  1.  Treasury certificate: These are securities for medium term borrowing. They are for a period of one to two years and they carry higher rate of interest than treasury bills.
  2. Treasury bills: These are securities used for short-term borrowing for about 90 days. This carries low rate of interest.
  3.  National savings scheme: Government can also borrow money from the national savings scheme to finance its projects.
  4. Development stock: These are referred to as government stock and they are used for long term borrowing of up to five years and above.

BALANCED AND UNBALANCED BUDGET

            PERFORMANCE OBJECTIVES

Explain the concepts of budget surplus balanced budget and the component of national debt.

Explain the concept of and criteria for revenue allocation (including resource control) in Nigeria and associated problems

Negotiations: The government can borrow from external financial institutions such as the Paris Club, international Monetary Fund (IMF), and World Bank

REASONS WHY GOVERNMENT BORROW MONEY

  1. To finance budget deficit: When a government suffers deficit budgeting, it may borrow money in order to finance such budget.
  2. To finance huge capital projects: Money can be borrowed by government to enable it to finance some huge capital projects.

To meet cost of national emergencies: Government can embark on borrowing to enable it to meet the cost of national emergencies such as war, drought, famine, hurricane, etc.

To reduce economic burden on taxpayers: Government can decide to reduce the economic burden on tax payers by borrowing money to execute proposed projects.

  • To meet balance of payment disequilibrium: Government can borrow money to enable it to correct or execute balance of payment deficit.
  • To provide employment opportunities: Government may equally borrow to establish certain projects capable of generating employment opportunities for the people.
  • To service some loans: Government can borrow money in order to service another loan earlier taken, either from internal or external sources.
  • To control fluctuations in national income: A fall in expected income may warrant a government to borrow in order to meet up the required fund to finance its projects.

Some terms associated with budget

Debt servicing

Debt servicing refers to the payment of interest on loans taken by the government and the payment of the capital sum at a future date.

Debt management: Debt servicing refers to a process or situation whereby the government structures the country’s debts, which are denominated in foreign currency, with the fundamental aim of reducing the total external debt stock.

Burden of national or public debt

The extent of the burden of national or public debt is determined by the type of debt, whether internal or external, the purpose of the debt and the period of repayment.

A huge national debt can affect the economy of a country in the following ways:       

  1.  The servicing of an external debt will involve an outflow of resources, which can otherwise be used for economic development.
  2. It can reduce the availability of foreign exchange in the form of depleted foreign reserves.
  3. The servicing of a large internal debt will limit government’s ability to provide social capital and services for the people.

 A large domestic debt will influence the distribution of income in the country.

  • If a large internal debt is sustained by a high rate of interest, it will reduce private investment on capital goods.
  • A large external debt can make a country to be susceptible to the whims and caprices of external creditors.

  1.     economic tools for nation building
  2. budgeting
  3. factors affecting the expansion of industries
  4. mineral resources and the mining industries
  5. demand and supply
  6. types of demand curve and used
  7. advertising industry
  8. factors of production
  9. entrepreneur
  10. joint stock company
  11. public enterprises
  12. private enterprises
  13. limited liability companies
  14. migration
  15. population
  16. market concept
  17. money market
  18. shares
  19. how companies raises funds for expansion
  20.  

WEED AND THEIR BOTANICAL NAMES
1. ENVIRONMENTAL FACTORS AFFECTING AGRICULTURAL PRODUCTION
2. DISEASES
3. 52. SOIL MICRO-ORGANISMS
4. ORGANIC MANURING
5. FARM YARD MANURE
6. HUMUS
7. COMPOST
8. CROP ROTATION
9. GRAZING AND OVER GRAZING
10. IRRIGATION AND DRAINAGE
11. IRRIGATION SYSTEMS
12. ORGANIC MANURING
13. FARM YARD MANURE
14. HUMUS
15. COMPOST
16. CROP ROTATION

  1. IRRIGATION AND DRAINAGE
    19. IRRIGATION SYSTEMS
    20. INCUBATORS
    21. MILKING MACHINE
    22. SIMPLE FARM TOOLS
    23. AGRICULTURAL MECHANIZATION
    24. THE CONCEPT OF MECHANIZATION
    25. PROBLEMS OF MECHANIZATION
    26. SURVEYING AND PLANNING OF FARMSTEAD
    27. IMPORTANCE OF FARM SURVEY
    28. SURVEY EQUIPMENT
    29. PRINCIPLES OF FARM OUTLAY
    30. SUMMARY OF FARM SURVEYING
    31. CROP HUSBANDRY PRACTICES
    32. PESTS AND DISEASE OF MAIZE- ZEA MAYS
    33. CULTIVATION OF MAIZE CROP
    34. OIL PALM
    35. USES OF PALM OIL
    36. MAINTENANCE OF PALM PLANTATION
    37. COCOA
    38.
    39. PROCESSES IN COCOA CULTIVATION
    HOLING AND LINING
    40. YAM
    41. LAND PREPARATION FOR YAM
    42. DEPT OF PLANTING
    43. SPACING OF YAM
    44. PLANTING DEPT OF YAM
    45. STORAGE OF YAM
    46. STAKING OF YAM
    47. HARVESTING OF YAM
    48. COWPEA
    49. FORAGE CROP AND PASTURE
    50. FORAGE GRASSES
    51. SILAGE
    52. PASTURE
    53. TYPES OF PASTURE
    COMMON GRASSES AND LEGUMES
    54. GRASSES
    55. LEGUMES
    56. ESTABLISHMENT OF PASTURES
    57. 201. FORAGE PRESERVATION
    58. HAY SILAGE
    59. FORESTRY IMPORTANCE OF FORESTRY 206. FOREST MANAGEMENT FOREST REGULATION DEFORESTATION AFFORESTATION
    60. DISEASES AND PESTS OF CROPS
    61. MAIZE SMUT
    62. RICE BLAST
    63. MAIZE RUST
    64. LEAF SPOT OF GROUNDNUT
    65. COW-PEA MOSAIC
    66. COCOA BLACK POD DISEASE

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