Index to Nigerian Newspapers

The financial stress index is rising due to rising political tension and the 2022 budget, which was grudgingly signed into law by President Muhammadu Buhari. The spending outlay was raised by a whopping N735 billion, with a near 40 per cent fiscal deficit stuffed into the budget. Last year, the gross domestic product (GDP) broke a six-year record as it jumped by 5.01 per cent year-on-year, consolidating the positive growth that started in the fourth quarter of 2020. This leg-up performance came two quarters after the country exited one of the deepest recessions in its history. The growth rate in Q3 of 2021 moderated to 4.03%, reflecting the effect of the gradual reopening of the economy in the comparative quarter in 2020. The sectoral performances, as contained in last year's growth data and other recent ones, underscore an economy that is not only bleeding but also deeply flawed by many contradictions.

The global tightening of developed economies, particularly as announced by the United States Federal Reserve System and other developed countries, has raised concerns about Nigeria's investment outlook. Nigeria's Monetary Policy Committee (MPC) is contemplating a higher interest rate, as the economy is believed to have achieved modest stability while inflation continues to raise concerns. The interest rate hike will make the international debt market more expensive and servicing of existing dollar-denominated debts more challenging for political and corporate entities with huge exposures. The Federal Government has proposed to source N2.57 trillion from the international market and another N1.16 trillion from multilateral and bilateral loan drawdowns to finance the fiscal deficit. The World Bank has also released its January Global Economic Prospects. The International Monetary Fund (IMF) warned of impending financial stress in emerging markets and developing economy (EMDE) regions as tightened monetary measures could drive up debt refinancing and servicing costs and trigger capital outflows. It also noted that capital flows to emerging markets would weaken as the dollar appreciates relative to other major currencies. It listed possible financial system crises as a spillover of the U.S. tightening, urging policymakers to prepare for spillovers.