Fighting recession with borrowing, budgeting

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All eyes are on the Federal Government to stimulate the economy by borrowing and the funding of critical infrastructure in this year’s budget through the Debt Management Office (DMO). The N7.298 trillion budget is seen as a viable tool to fight recession, but a good part of it will come from borrowing.

The underlying assumptions for the 2017 budget, which become even of greater significance, at this time of recession, are average crude production of 2.2 mbpd; an average crude price of $42.5/pb and an average exchange rate of N305/$ (the current interbank rate).

Then, a soaring oil price may compensate for an underperformance on production, where that is the case. But beyond the 2017 budget, the government says its economic team has returned to the drawing board to avert depression, and cushion the pains of the recession. Besides, countries caught in global, regional or national economic recession or depressions invariably, depend on borrowing to bail out their economies.

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