Vunderkind
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Chief Economist, Renaissance Capital (RenCap), Charles Robertson has said that Federal Government’s rebasing of the Gross Domestic Product (GDP) could raise this year’s budget deficit by N400 billion to N1.9 trillion. The economist said the GDP revision may affect the 2014 budget too. “It does nothing to improve budget revenues or expenditure. It does mean, however, that a nominal federal government budget deficit of N912 billion could be raised by about N400 billion to N1.3 trillion and still remain at 1.9 per cent of GDP, using the new 2014 GDP estimate we have. This may be very tempting to politicians in pre-election mode,” he said.
Robertson said the wider budget deficit would then require additional borrowing, via either Eurobonds which Nigeria’s debt office is trying to move towards, or domestic debt. Higher supply might offset the benefit to debt holders of the improved debt ratios and a possible rating upgrade.
Robertson said the GDP re-basing could cut the public debt ratio from 20 per cent of GDP to 13 per cent, and cut public external debt below two per cent of GDP, while the current account surplus may still be five per cent of GDP. “We suspect the rebasing is supportive of a possible upgrade in Nigeria’s Ba3/BB- ratings over 2014 to 15,” he said.
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Source: TheNation
Robertson said the wider budget deficit would then require additional borrowing, via either Eurobonds which Nigeria’s debt office is trying to move towards, or domestic debt. Higher supply might offset the benefit to debt holders of the improved debt ratios and a possible rating upgrade.
Robertson said the GDP re-basing could cut the public debt ratio from 20 per cent of GDP to 13 per cent, and cut public external debt below two per cent of GDP, while the current account surplus may still be five per cent of GDP. “We suspect the rebasing is supportive of a possible upgrade in Nigeria’s Ba3/BB- ratings over 2014 to 15,” he said.
Click here to read more
Source: TheNation
