Foreign

UK Economy Likely to Shrink – IMF

By Web News 357

The International Monetary Fund has said, the UK economy will shrink and perform worse than other advanced economies, including Russia, as the cost of living continues to hit households.

According to IMF, the economy will contract by 0.6% in 2023, rather than grow slightly as previously predicted, as the IMF also said, it thinks the UK is now “on the right track”.

Chancellor Jeremy Hunt said the UK outperformed many forecasts last year.

But shadow chancellor Rachel Reeves said the figures showed the UK “lagging behind our peers”.

The IMF, which works to stabilize economic growth, said it had downgraded its forecast for the UK because of its high energy prices, rising mortgage costs and increased taxes, as well as persistent worker shortages. It did not mention Brexit in its report as a factor for the UK not performing as well as others. Today marks three years since the UK left the EU.

The UK is expected to be the only country to shrink next year across all the advanced and emerging economies. Even sanctions-hit Russia is now forecast to grow this year.

If a country’s economy shrinks, typically this means companies make less money and the number of people unemployed rises.

IMF chief economist Pierre-Olivier Gourinchas told the BBC that last year, the UK had “one of the strongest growth numbers in Europe”, having expanded by 4.1%.

Figures released on Tuesday indicated that the Eurozone grew by 3.5% in 2022, while the economy of the whole European Union expanded by 3.6%.

Mr Gourinchas said this year’s forecast for the UK reflected its “high dependence” on expensive liquid natural gas, which had driven up the cost of living.

He said the government plans since November when it set out its spending plans in the Autumn Statement showed the UK was “certainly trying to carefully navigate these different challenges and we think that they are on the right track”.

BBC/Taiwo Akinola

Subscribe to our Telegram and YouTube Channels also join our Whatsapp Update Group

News Analysis

Reducing the Nation’s Foreign Debt

By Web News 836

In April this year, President Muhammadu Buhari sought the approval of eight hundred and fifty billion dollars facility, to be sourced from domestic markets to fund critical Capital Projects in the 2020 budget.

Last month, the President also sought approval for an additional over five billion dollars loan to finance the 2020 budget shortfall and some critical projects.

These include over three billion dollars facility from the International Monetary Fund, IMF, over one billion dollars from the World Bank, five hundred million dollars from African Development Bank, AFDB for Covid-19 and one hundred and thirteen million dollars from Islamic Development Bank.

Towards the end of last year, the government sought over twenty-two billion dollars in foreign loans under its borrowing plans.

As a result of this, debt servicing has increased from two point four trillion naira in the 2019 budget, to two point nine trillion naira in the 2020 revised budget.

The advent of Covid-19 pandemic with its effect on putting virtually everything in a standstill and the fall in crude oil prices ,there is no doubt that the country will need to brace up to withstand these challenges.

This is a country whose budgets, aside from the huge shortfall mechanisms is hampered by debt service, and near collapse of critical infrastructure of the economy.

Government will have to put tough policies in place in the months ahead to bring about economic rejuvenation.

Successive administrations had paid little attention to address the unjustifiable wastes in the government circles and the public service in general.

It is necessary for government to focus on realistic steps to take to convince Nigerians of the administration’s understanding of the challenges the country is going through.

For instance, the Nigerian parliamentarians are believed to be the highest paid in the world, which is one of the issues government needs to beam its searchlight on.

It is commendable that the government wants to implement the Orosanye’s report on the reform of the public service several years after the government published its white paper.

At this critical point in time, it will be a case of a misplaced priority if the over nine billion naira, voted for in the 2020 budget for the rehabilitation of the National Assembly complex is used on the project.

The government should march their words of reducing wastes in governance with words and action as a country that spends more than half of its earnings to service debts and less on capital expenditure, will have little left in terms of development.

Fawzeeyah Kasheem