Global debt expands $2 trillion in Q1 on easier financial conditions

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Global debt grew a hefty $2 trillion in the first three months of 2019 buoyed falling interest rates in the face of easier financial conditions, figures from the Washington-based Institute of International Financial (IIF) show.

Borrowers took on debt in first quarter at the fastest pace in over a year. At $246 trillion which equates to almost 320 percent of world Gross Domestic Product (GDP), global debt is just $2 trillion away from the all-time high of $248 trillion reached in the previous corresponding quarter last year.

“It is unsurprising that global debt grew on the premise that major central banks are tilting towards more accommodative policy stance” said Ifeanyi Obioha, Associate at Ernest & Young (EY). “While lower interest rates encourage consumers and businesses to borrow to boost growth, they can also dig an economy into a deeper hole.”

The global finance body maintained that going forward broad-based central bank easing could prompt more debt build-up across the board, thwarting deleveraging efforts and rekindling concern about long term headwinds to global growth.

Debt owed by emerging markets (EMs), which accounted for 28 percent of global indebtedness and 216 percent of world GDP, grew marginally 15 basis points to a record high of $69.1 trillion in first quarter.

The persistent economy-wide increase in EM borrowing continues to feed into higher contingent liabilities for many sovereigns.

With households and government debt reaching record high of $12.5 trillion and $15.6 trillion respectively, rise in overall debt to GDP ratio since last year has been most significant in China, South Africa and Brazil.

According to the global finance body, high reliance on short-term debt leaves many emerging markets exposed to sudden shifts in global risk appetite, saying dovish monetary stance of major central banks offers a renewed opportunity for … Read More...

Nigeria’s external imbalance widens on increasing offshore borrowings

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Nigeria’s ability to weather the storm from external shocks or sudden deterioration in economic conditions is waning as the country’s increasing appetite for foreign borrowings continues to outpace accretion to external reserves. Since the 2014 collapse in oil prices that caused the spread between the Federal Government’s actual and projected revenues to widen, the country…

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NLNG: Ruined indigenous contractor cries out over N1.147bn

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An indigenous entrepreneur doing business under ‘minor civil contractor’ category with the Nigeria Liquefied Natural Gas (NLNG) has cried out saying his enterprise has been ruined through alleged acts of vindictiveness, wickedness and total suppression, leading to the eventual termination of contract and mounting debts.

The Delta State-born entrepreneur, Shedrack Ogboru, cried to newsmen in Port Harcourt at a press briefing, saying his firm, Macobarb International, was now heavily indebted to a commercial bank due to the N68 million loan obtained since 2014 to execute the first phase of the job that had turned into a protracted debt with unmentionable interest accumulation, all due to the NLNG refusal to release payment.
He said the failure of the NLNG to honour payment schedules without any reason led to his firm being blacklisted by the Central Bank of Nigeria (CBN) for bad debt, all because of contract liability of N1.147 billion that the multinational corporation (NLNG) had refused to redress to this moment.

The indigenous contractor wondered if the NLNG would do this to any foreign company that did not do anything wrong, at a time the Federal Government was striving to assist indigenous businesses get ahead. His surprise is that no government agency he cried to had been able to go beyond preliminary responses, only to go silent after interacting with those he called NLNG demigods.
Narrating his ordeal to newsmen, Ogboru said his firm, Macobarb, got a job on January 9, 2014, to fabricate and install world-class access entry system called ‘Integrated Turnstiles and Vehicle Barriers System” that must be fabricated in Europe for security and seamless entry into the world-class facilities of the NLNG. He said this contract worth N95 million was to be executed in phases supervised by a team of experts and engineers … Read More...