Managing its debt.

Position:NIGER: FINANCE
 
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Falling raw materials prices and increased military spending are two of the factors causing Niger's budget deficit to grow. The way forward lies in diversifying the economy and boosting exports

FOR SEVERAL YEARS NIGER'S overall budget deficit has been growing. This is mainly due to steadily rising expenditure: spending increased by 29.8% between 2014 and 2015 to reach $16.6bn. In August 2016, Niger was forced to amend its Finance Act of November 2015--which had allocated for a state budget of $2.92bn--in order to take account of a reduction in its revenues of $18m.

This reduction was caused mainly by developments in the mining and oil sectors and by higher spending, which was partly due to the increased military budget (+CFA9.44bn--$15.4m) for weapons and wages. In order to generate additional revenue, the country has (among other things) issued Treasury bonds to the value of $50m and securitisations amounting to $60m, meaning that the issuance of Treasury bonds has risen from $165m to $28 lm.

The revised public debt has risen to $284m (as opposed to the $230m specified in the Finance Act of November 2015).

Most of the funds raised by this new debt issuance will be used to pay for the anticipated budget overspend on wage bills, partially but not solely for the army. "The state is so desperate for liquidity that it has started taxing certain businesses in a random way. The state is relying on the banks to pay the salaries of public servants: $58m in salary advances have been paid by the banks, who are still waiting for the state to reimburse them," says one expert on Niger's public finances.

He adds: "The internal debt cannot be serviced by the banks indefinitely it is not the private sector's job to pay for public expenditure!"

As the country's internal debt rose from $121.24m in 2012 to $682m in 2015 (an increase of over 500%), its external debt has also ballooned, with a steady increase that took it from $1.21bn in 2012 to $1.86bn in 2015. Much of this has been due to increased military spending which has been essential to ensure peace...

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