Nigeria 2024 Budget: Debt Costs Pressure Social Spending – Bloombe
In 2022 debt servicing used up 96% of government revenue. Perhaps the IMF, the World Bank and other public entities should hire new economists who have a proven ability to addition and subtraction. Why not raise the bar higher, to 8th grade level mathematical ability?
I think it would not be a bad idea to change the economics curriculum so that by a decade from now, most early career economists will both know and understand why loaning money with the high risk of nonpayment increases inflation at the world level as the country who receives the loan buys goods and services without the actual burden of providing goods and services. Why not have reality trump economic theory?
Just a wild idea, odious and onerous contracts are a less than zero sum game, at least in the public sector. Perhaps, instead of giving odious debt, the economists could make sure that the intended recipient nation has done claw backs of money from the elites that came from grafts, corruptions, extortions and embezzlements. If needed, give them a loan to help with creating a functional justice system and give grants to private groups who want to establish a free press, investigative journalism, and the ability to publish assertions by whistleblowers.
Make the initial tranche of loan disbursements contingent on removing all laws against a free and unfettered press and adding press freedom rights to the Constitution. The enactment of new laws, with penalties for harming the free flow of information and a free press should be essential as well.
The lending institution should fact check the Cayman Islands, Switzerland, Wyoming, South Dakota and other opaque tax havens that may have blood money. When adequate progress has been made and fact checked by the lending organization, only then consider non odious loan contracts with claw back provisions. Why not consider a public-to-public loan whose annual payment is limited by a maximum of 25% of current actual tax revenues? LS