MANAGING EXTERNAL DEBT CRISES IN DEVELOPING COUNTRIES
MANAGING EXTERNAL DEBT CRISES IN DEVELOPING COUNTRIES
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Date
1994-06
Authors
JA'AFARU, IBRAHIM
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Abstract
The Nigerian economy has undergone considerable strains and stresses since 1981. the pressure has
been evident in the persistent deficits in the balance of payments, low external reserves, deficit in
government finances, mounting domestic and external debts etcetera.
The inherent weakness in the structure of the economy as reflected in the over dependence on foreign
exchange earnings from oil and weak terms of trade among others, led to a situation in which
Government sought to bridge the domestic financial resource gap with external borrowings.
The magnitude and severity of Nigeria's debt problem is demonstrated by the movement of certain
debt ratios. At 13.3 percent in 1980, the Debt/Export ratio rose to 404.2 percent in 1986 through
341.0 percent in 1987 and to 241.5 percent in 1991.
Similarly, the debt burden as measured by the ratio of debt service/exports of goods and services rose
rapidly from 0.7 percent in 1980 through 28.1 percent in 1985 to 25.8 percent in 1991. This ratio
would have exceeded 65% since 1985 but for payment default and subsequent debt restructuring and
refinancing.
In the study, it has been discovered that debt restructuring have not only been complex, protracted
and expensive, they have also tended to divert attention from the more important issues of growth
and development.
It has been revealed that various debt repayment strategies adopted by the Government has not been
very effective and the capacity of voluntary market approach to reduce debt is very limited as the
period of external debt crises has been associated with little or no economic growth.
From the study, one will conclude that debt forgiveness plus uninterrupted flow of resources to least
developed countries is the only option available to solve the debt crises as debt repudiation could not
be possible because of the interdependence of countries in today's new world economic order
Description
BEING A PROJECT SUBMITTED TO THE POST-GRADUATE SCHOOL,
AHMADU BELLO UNIVERSITY, ZARIA IN PARTIAL FULFILMENT
OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF
BUSINESS ADMINISTRATION (MBA) DEGREE
DEPARTMENT OF BUSINESS ADMINISTRATION
AHMADU BELLO UNIVERSITY
ZARIA
JUNE, 1994
Keywords
EXTERNAL,, MANAGING,, DEBT CRISES,, DEVELOPING,, COUNTRIES