Currency Devaluation Research Articles

Monetary Policy and Economic Growth of SAARC Countries

The debate on economic policies continues in both the local and global economies. All of the academics are interested in monetary and fiscal policy and how it affects the economy. The study attempts to explore whether there is any evidence that the SAARC countries' economic growth can be influenced by monetary policy. The study applies the Pedroni cointegration approach for panel autoregressive distributed lag (ARDL) with the Pooled Mean Group (PMG) to study the relationship between monetary policy and economic growth of six SAARC nations over the period from 1983 to 2020. The recent study addresses the empirical gap within the context of the southeastern regions of the globe. Overall stylized facts show that monetary policy is causally linked and successful in the long run to accelerate economic growth. Money supply, one of the most crucial variables under study, contradicts the monetarist claim that monetary policy is too effective in the short term. The study also notes that currency devaluation is a serious concern for both short- and long-term growth while inflation is only a short-term one. In the SAARC countries, domestic credit to the private sector is better for short-term economic growth even though it has no long-term benefits. Thus, monetary authorities and the government of the SAARC nations should maintain an adequate level of money supply, adopt an export-led policy to appreciate currency, promote short-run domestic credit to the private sector, and stabilize the short-term price level to accelerate economic growth and development.

Trade Policies and Fiscal Devaluations

Fiscal devaluations—an increase in import tariffs and export subsidies (IX) or an increase in value-added taxes and payroll subsidies (VP)—have been shown to provide as much stimulus under fixed exchange rates as a currency devaluation. We find that if agents expect policies to be reversed and the tax pass-through is large, VP is contractionary and IX provides a modest boost. In our medium-scale DSGE model, both features are crucial in accounting for Germany’s underperformance in response to VP in 2007. These findings cast doubt on fiscal devaluations as a cyclical stabilization tool when monetary policy is constrained. (JEL E32, E52, E62, F13, F33, H20)

The trends and effects of food price inflation on the cost and affordability of nutritionally adequate diets in Malawi

Background Global challenges of hunger, food insecurity, and malnutrition persist, with nearly one in three people lacking sufficient food access. The COVID-19 pandemic exacerbated these issues, particularly in Africa, where 59.6% of the population grapples with food insecurity. Malawi faces high stunting and anaemia rates in children, driven by poverty, inadequate health services, and improper diet. Despite progress, the prevalence remains above regional averages. Research reveals imbalanced diets in Malawi, primarily reliant on maize, risking micronutrient deficiencies. This study examines diet affordability in the context of rising costs and low incomes, aiming to influence policy in addressing undernutrition in Malawi and highlighting the overlooked role of affordability in nutrition access. Objectives This assessment aimed to estimate the minimum cost of a nutritious diet using locally available and culturally acceptable food items in Malawi. The objective was to explore how economic constraints affect Malawian households, particularly the poor and ultra-poor, in accessing such diets. Additionally, it sought answers to questions about cost changes over 12 months and affordability among different wealth groups in the country. Methods This study involved secondary data analysis by employing the Cost of the Diet (CotD) research method and software. The World Food Programme’s Minimum Expenditure Basket (MEB) provided monthly food prices for 28 items from April 2021 to March 2022. Comparing the cost of a nutritious diet with per capita income from the Malawi Poverty Report, we estimated the affordability gap. Food price data was from 77 markets in 25 districts, ensuring national representation. Results The annual cost of a culturally acceptable nutritious diet for a five-person household from April 2021 to March 2022 was MWK 84,658/month (≈$103). The diet’s cost increased by 25% during the period, from MWK 2,519 to MWK 3,140 per day. Only average urban households had sufficient income to afford the diet, with a 9.7% surplus. Ultra-poor, poor, rural, and average Malawian households faced affordability gaps of 139.5%, 61.4%, 48.5%, and 32%, respectively. Closing the affordability gap would require additional monthly income of 29,134 kwacha (≈$35.5) for an average Malawian household, 37,481 kwacha for a typical rural household, 42,452 kwacha for a poor household, and 58,885 kwacha for an ultra-poor household. Conclusion The CotD assessment revealed a significant increase in the cost of a nutritious diet over the past 12 months. Most of the population cannot afford the cheapest nutritious diet. The recent currency devaluation may worsen the situation. Cash, voucher or food distribution could help close the affordability gap for poor and ultra-poor households. Regular monitoring and ongoing updates of the CotD results are necessary for informed decision-making.

An Analysis of the Effect of Naira Devaluation on Nigerian Balance Of Trade

This study investigates the effect of naira devaluation on Nigerian balance of trade using time series data from 1986 to 2021. The study examined the long run and short-run equilibrium relationship between devaluation and trade balance over the study period. The study used unrestricted Vector Auto Regression (VAR), Co-integration and Vector Error Correction Mechanism (VECM) technique in the analysis of data. The variables currency devaluation (CDV), Export rate (EXPT), Import rate (IMPT) and Trade balance are found to be 1(1) variables, while Interest rate (INTR) is found to be 1(0) variables. Based on the VAR Co- integration test result, it indicates long-run equilibrium relationship among the variables. The error correction term was correctly signed and statistically significant. The estimates from the VAR model showed both positive and negative shocks running from naira devaluation to trade balance, export rate, import rate and currency devaluation based on the past and current values. The study concluded that, naira devaluation have positive and significant impact on trade balance of Nigeria. The study recommended that, Government should improve this indigenous innovation to meet up with international standard as a means to reduce dependence on import and encourage production of competitive goods and services, as export becomes cheaper after devaluation, it is expected that Nigeria as a country will immensely improve on its exported goods and increase the output of exportable goods which will leads to favorable balance of trade among others.

The Impact of Disclosing Successive Adjustments to Foreign Exchange Rates on Stock Profitability

The Aim of this research is to analyze the impact of exchange rate Adjustments on stock returns in Egypt, and the impact of these changes depends on the analytical theoretical study approach to achieve the research objectives by reviewing what was stated in previous studies related to the research variables. The research focused on Egypt’s modern experience in exchange rate policies. As the research was conducted during the period from (2019-2023), it appears that positive and negative changes in the exchange rates of the Egyptian pound to the US dollar have a significant impact on stock returns, whether in the short or long term. It was found that currency depreciation tends to have a stronger impact on stock returns than the effect of currency appreciation, as the research concluded that exchange rate changes are affected by external variables, which affects stock returns, and that disclosures about exchange rate changes are necessary to avoid being subject to deterioration in stock returns. Practical Implications The results provide important insights for investors, regulators, and policymakers. With the devaluation of the local currency negatively impacting stock returns, investors should consider implementing appropriate currency hedging strategies to reduce the risks of currency depreciation, and thus maintain the expected rate of return on investments denominated in Egyptian pounds. Keywords: Foreign Exchange Rates – Stock Returns – Egyptian Stock Exchange

Финансовая точка безубыточности и индикатор обесценивания собственного капитала предприятий агропромышленного комплекса

The agro-industrial complex of the Russian Federation occupies a special place in ensuring the food security of the country, which makes it relevant to study the issues of a real increase in the equity capital of the relevant enterprises. As an indicator of its depreciation, the indicator of return on equity is considered, the value of which must be compared with the parameters of factors that reduce the real value of such capital: inflation, devaluation of the national currency, opportunity costs (losses) from choosing the worst use case, and income tax at a conditionally zero level of real profitability. The financial break-even point is proposed to be considered as such a volume of activity in which the value of return on equity shows the feasibility of business, taking into account inflation and devaluation of the national currency, as well as possible alternatives for the use of capital. The impossibility of achieving it in the long term makes investment in the business inappropriate. It has been determined that over the past 22 years, the average statistical losses from inflation and income tax at a conditionally zero real level of return on equity corresponded to a value of 11.69%. To ensure the preservation of the real value of such capital, its profitability at the enterprises of the agro-industrial complex had to exceed the specified value. Over the specified period of time, the inflation rate in the country exceeded the rate of devaluation of the national currency, which makes it possible to use inflation as a benchmark for the depreciation of equity capital. An analysis of the actual value of the return on equity for the period 2017–2021 for agribusiness enterprises showed that, in general, this indicator exceeded the value of 11.69%. Thus, over a long period of time, the main activity of enterprises in the agro-industrial complex provided their owners with a real increase in capital. It is possible that such a level of profitability was provided at the expense of financial state assistance to the considered sector.

Peculiarities of pricing in the grain market

Relevance. The grain market is one of the key sectors of the agro-industrial complex and is important for the development of the entire economy of the country. In Russia, there are many problems associated with pricing in the grain market, including the uneven distribution of agricultural producers across the country and an underdeveloped infrastructure for storing and transporting grain. Thus, this article is relevant and relevant for modern business conditions.Methods. General scientific and special research methods are presented, including a descriptive method (generalization techniques, observations, interpretation, comparison, etc.), methods of pricing analysis and forecasting grain prices, as well as recommendations for optimizing pricing in the grain market.Results. As a result of the analysis of the peculiarities of pricing in the grain market, the following results were obtained: yield is one of the main factors affecting the price of grain, insufficient gross grain harvest leads to a shortage of products on the market and an increase in prices; supply and demand also have a significant impact on the price of grain; with the devaluation of the national currency, grain prices may rise; when due to the unfavorable price environment for grain transportation, the price of products will also increase. The price of grain is a key factor for all market participants, so it is necessary to monitor changes in the market and adapt to them. To ensure the stability and profitability of the business, it is necessary to take into account all factors affecting the price of grain and make effective decisions based on the analysis of the market situation.

Threshold-based asymmetric reactions of trade balances to currency devaluation: fresh insights from smooth transition regression (STR) model

ABSTRACT This study sought to ascertain relatively the asymmetric reactions of trade balances to currency devaluation and non-devaluation regimes in sub-Saharan African (SSA) countries between 1981 and 2021 using the smooth transition regression (STR) model. The outcome indicates that, in Ghana, Malawi, and Mozambique, currency devaluation as a change in policy has a major influence on the trade balance; however, in Nigeria, Kenya, and Tanzania, this impact is negligible. Nigeria had the highest gamma coefficient but insignificant, suggesting that policy change has not significantly impacted the country’s trade balance despite the high transition rate. Findings from the devaluation regime revealed that, with the exception of Ghana, all other nations’ real exchange rates are inversely and significantly related to the trade balance. Additionally, it displayed an average threshold parameter of 0.147, indicating that a devaluation of more than 14.7% within a year will deteriorate the trade balance in SSA. The results indicate that the devaluation effects hinge on the structure, macroprudential policies, and infrastructural growth of the nation. The study recommended amongst other things, (i) a robust structural transformation in key sectors (ii) judicious investment in infrastructural development to address the key bottleneck in the quality and quantity of domestic production.

Book Review: The Protection of Intellectual Property Rights Under International Investment Law, Simon Klopschinski, Christopher Gibson & Henning Grosse Ruse-Khan. Oxford, Oxford University Press. 2021

With the growth and expansion of international trade, government policymakers need to formulate policies advancing favourable bilateral trade relations, including a comparative advantage to penetrate export markets. To maintain growth and protect existing trade flows, we are seeing an increase in various protectionist tactics, amongst which is the ‘beggar-thy-neighbour’ approach (gaining an economic advantage at the expense of others). We explore this approach extensively to reveal what makes it so attractive to nations. Can it be justified in the modern global economy? Beggar-Thy-Neighbour, Bilateral Relations, Currency Devaluation, Economies, Government, International Trade, Policy, Protectionist Policies, Tariff, Trade Barriers

Commentary: ‘Beggar-Thy-Neighbour’ and International Trade: An Analysis With Policy Recommendations

With the growth and expansion of international trade, government policymakers need to formulate policies advancing favourable bilateral trade relations, including a comparative advantage to penetrate export markets. To maintain growth and protect existing trade flows, we are seeing an increase in various protectionist tactics, amongst which is the ‘beggar-thy-neighbour’ approach (gaining an economic advantage at the expense of others). We explore this approach extensively to reveal what makes it so attractive to nations. Can it be justified in the modern global economy? Beggar-Thy-Neighbour, Bilateral Relations, Currency Devaluation, Economies, Government, International Trade, Policy, Protectionist Policies, Tariff, Trade Barriers

Nexus among Economic Policy Uncertainty, Stock Returns and Macroeconomic Variables- New Evidence from Developing Country’s Stock Market using NARDL Cointegration Approach

Uncertainty generates hype which creates difficulty to predict the returns in the stock market. To answer this phenomenon this study is carried out which aims to investigate the nexus of Economic Policy Uncertainty with Stock Return having macroeconomic variables as controlled in Pakistan over the period of 2010 to 2022. A novel technique non-linear ARDL (NARDL) co-integration statistical approach to estimate and explore the asymmetric effect has been employed. The findings of this study show that there is significant long-term co-integration exists between shifts in Economic Policy Uncertainty with stock returns in Pakistan. We also found the short-run and long-run shocks (Positive and Negative) of EPU have a significant effect on the stock return along with the exchange rate and consumer price index. This means high uncertainty in economic policy can decrease the stock returns and low uncertainty (means high certainty) can increase the stock returns in Pakistan. More interestingly, we found an asymmetrical relationship between SEPU with stock returns which means no symmetry or no linearity in the relationship. Concisely, inflows from positive EPU shocks have a long-term negative impact on stock returns and negative EPU inflows shocks have a long-term positive impact on stock returns in Pakistan. To overcome political instability, stock market declines, rising of inflation, and currency devaluation this study can be useful for policymakers, the Government, regulatory authorities, investors, the equity market, and so forth .

БАНКІВСЬКИЙ СЕКТОР УКРАЇНИ: АНАЛІЗ ЧИННИКІВ НЕПЛАТОСПРОМОЖНОСТІ, БАНКРУТСТВА ТА ЛІКВІДАЦІЇ БАНКІВ

The article examines the trends observed in the Ukrainian banking sector, specifically focusing on changes in the number of banks from 1992 to 2023. The factors contributing to the increase in insolvent and bankrupt banks and subsequent liquidation and revocation of banking licenses are analyzed. The study identifies key factors that arise from both internal bank operations in the banking services market and external factors stemming from macroeconomic and political situations. These factors include a significant decline in GDP, currency devaluation, inflation, and military operations within the country. The article discusses the monitoring of current legislation norms that define the criteria for classifying banks as problematic and insolvent by the National Bank of Ukraine. The regulator associates these criteria primarily with internal issues within the bank, such as liquidity standards violations, non-compliance with current legislation and regulatory requirements, and a decrease in regulatory capital. Voluntary and forced liquidation processes are examined within the framework of the current legislation. Voluntary liquidation by bank shareholders allows the bank to maintain its legal entity status. Banks undergoing compulsory liquidation have the option to reorganize through mergers and acquisitions. During the process of cleaning up the banking sector, system banks received substantial government support in the form of financing through bonds. The article argues that the cleansing of the banking system, which took place between 2014 and 2016 and continued in subsequent years, contributed to the stability and efficiency of the banking sector amid the war in Ukraine. The regulator liquidated banks with Russian capital during the hostilities and declared two banks insolvent due to risky operations and failure to repay debts to borrowers. Furthermore, the study concludes that the significant decrease in the number of banks in Ukraine did not impact the growth trend of total assets in the banking system, indicating the sector’s efficiency. Stress testing in three stages is highlighted as a means for determining the actual state of the banking system during times of conflict.

Scarcity Of Pain Medication In Pakistan Following The Devaluation Of Currency.

Madam, The scarcity of drugs harms patient safety and care.1 Media publications on the shortage of painkillers tend to generate panic and anxiety among the public owing to their role in patient analgesia and recovery. Pain, especially when untreated, has far-reaching consequences for patients' quality of life, including psychological, physical, social, and economic consequences. Untreated pain has proven to be associated with depression, mood fluctuations, and emotional instability, resulting in an overall low quality of life. The shortage of medicines is common globally, and the causes are multifaceted depending upon the region in consideration. Currently, Pakistan is in a similar crisis where the decreased availability of medications, among which analgesics constitute a vast proportion, is leaving many holes in quality, patient management and care protocols2-3 The reasons for the current crisis are multifactorial. However, the major chunk of it lies in the devaluation of the currency and the skyrocketing prices of petroleum, which has caused inflation among all utilities, including medicine. Reports by media outlets have shown an 80% increase in prices compared to prices five years prior. In contrast, the Pakistan Pharmaceutical Manufacturers Association (PPMA) chairman claimed only a 21–30% price increase. The gravity of the situation can be further augmented by the fact that the cost of paracetamol was increased from Rs 600/kg to Rs 2600/kg earlier this year, yet the medicine remains unavailable in the market.4 The scarcity of medication is not limited to pharmacies but has also found its way to hospitals, where the healthcare providers either have to prioritize patients when it comes to giving analgesia or there is no analgesia available in smaller setups.5 Another factor contributing to this predicament is the climate change-induced floods in the country. There is an increased demand for medicines, including painkillers, in flood-stricken areas and the decline in production due to non-availability of raw products owing to inflation has doubled the aftermath of this calamity. It is of the utmost urgency to mitigate this crisis, as analgesics are the most commonly used over-the-counter medicines and constitute a whole tier of patient care. To get to the bottom of the problem there needs to be more research, analysis, and investigation executed at a national level on how to streamline the production, distribution and sale of medicine, on alternative sources of treatment and if possible the placement of subsidies so that the barrier to the consumer is reduced.

Effect of Currency Devaluation on Performance of Small and Medium Firms in Beirut, Lebanon

Currency devaluation refers to a deliberate and official reduction in the value of a country's currency in relation to other currencies. It can occur through various mechanisms, such as adjusting interest rates, intervening in foreign exchange markets, or implementing monetary policies aimed at reducing the supply of domestic currency. Currency devaluation can create financial challenges for SMEs. Financial institutions may be more cautious in extending credit due to increased risks associated with exchange rate fluctuations. Devaluation reduces the value of collateral assets, making it harder for SMEs to secure financing.  The research used the descriptive research design. The target population was 200 small and medium firms in Beirut, Lebanon.  The study did sampling of 150 participants that were chosen from the target population of 200 small and medium firms in Beirut, Lebanon. Questionnaires were utilized to gather data. In conclusion, the devaluation of the Lebanese currency has presented numerous challenges for these businesses, impacting their competitiveness, profitability, and sustainability. It is crucial for SMEs to understand the direct and indirect impacts of currency devaluation. Increased import costs, inflationary pressures, and reduced purchasing power have placed significant strain on SMEs. By recognizing these challenges, SMEs can develop effective financial management strategies and explore hedging mechanisms to mitigate currency risk. The study recommended that Lebanese SMEs should consider developing export-oriented strategies, including identifying new export markets, conducting market research, and adapting their products and services to meet international demand. By capitalizing on export opportunities, SMEs can diversify their revenue streams and reduce their vulnerability to the domestic economic challenges caused by currency devaluation. Keywords: Currency Devaluation, Performance, Small and Medium Firms, Lebanon

Household debt, heterogeneity and financial stability: Evidence from Kazakhstan

Using a Monte Carlo method and quarterly data from the 2019 Household Expenditure and Income Survey, we examine the resilience of urban and rural households to various shocks, including exchange rate change, changes in asset prices, job losses, and decline in income. Based on the exposure at default (EAD) estimates, the largest impact was observed in the case of an income shock. The EAD values ranged from 0.38 to 0.43 compared to a baseline case of 0.35. The latter indicates that about one-third of the debt held by households may be problematic, especially in rural areas. The second largest impact is seen for a major currency devaluation, followed by the rise in unemployment. In addition, the breakdown of these results by income shows that households in the lower income quartiles are more vulnerable. Potential implications are discussed.

Sovereign wealth fund on sustainable economic growth in Nigeria

The Sovereign Wealth Fund (SWF) nations understood that having enough money in easily accessible foreign accounts would be beneficial to the government in times of fiscal crisis, currency devaluation, natural economic calamity, and even political upheaval to help cushion sustainable economic growth. Between Q1 2005 and Q4 2020, the study looked at the impact of Nigeria's sovereign wealth fund on the country's ability to sustain economic development. In order to conduct the empirical analysis, the study used the ARDL technique of analysis. In order to prevent erroneous regression results, unit root tests were performed on each of the variables. The co-integration test revealed that there is a long-term (or equilibrium) relationship between Nigeria's sovereign wealth fund and the sustainability of its economic growth. It was revealed that Nigeria's gross domestic product was significantly impacted by the Nigerian Infrastructural Fund. Last but not least, it was revealed that the stability Fund has a considerable impact on GDP in Nigeria. Future Generation Fund was also found to have a big impact. On the whole, SWF impact significantly on sustainable economic growth in Nigeria. If government wishes to maintain economic growth and improve the lives of Nigerians, it should demand and pursue effective control and monitoring of the infrastructure, future and stabilization funds.

BANKING SYSTEM OF UKRAINE: STATUS AND DEVELOPMENT TRENDS

s an important component of the financial market, the banking system of Ukraine provides conditions for the effective functioning of the entire economic system of the country. Traditionally, the task of the banking system is the concentration of monetary resources with their subsequent redistribution among business entities, households, and industries. By fulfilling this task, the banking system actually contributes to the economic development of the state.In 2022, with the beginning of the war, the national banking system was faced simultaneously with problems of a general economic internal nature caused by the war: a reduction in production and income from the export of industrial and agricultural products, devaluation of the national currency, an increase in security risks, mass migration of the population and problems of a global nature -this is a slowdown in the development of the world economy. In these conditions, the National Bank of Ukraine, as the regulator of the money market, was forced to switch to a strict model of monetary policy, the goal of which was, first of all, to maintain the rate of inflation and exchange rate stability, and the main "recipes" for improving the money market were to increase the discount rate and mandatory reserve norms for commercial banks. The transition to a restrictive monetary policy is always a test for banks, but. the timely application of restrictive measures made it possible to maintain control over the currency market, over price dynamics, and give a positive forecast for economic growth.Activity in the conditions of war and economic uncertainty became a reality for the banking system and a basis for the formation of further development trends.In the medium-term perspective, the main trends in the development of the banking sector include the NBU's continued strict monetary policy and the strengthening of market incentives for banks to attract long-term hryvnia deposits from individuals; dominance of credit risks in banking; significant investments by commercial banks in high-yield certificates of the NBU and Domestic state loan bonds with the aim of increasing interest income; gradual decrease in liquidity in the banking sector; slowing of inflation as a result of the reduction of security factors; the return of banks to their pre-war business models with the simultaneous search for new forms of lending and the formation of an effective anti-crisis model of bank regulation

Large-scale monitoring in the DRC’s Ituri forest with a locally informed multidimensional well-being index

To monitor quality of life in changing landscapes and assess impacts of interventions, development scholars and practitioners continue to seek sensitive, flexible, practical means of measuring well-being. An approach that has received relatively little attention from development scholars but that is gaining traction among NGOs is the use of a well-being index derived from a list of locally defined and democratically weighted basic necessities. The Wildlife Conservation Society has been piloting a tool called the Basic Necessities Survey (BNS) in and around protected areas in Central Africa and beyond for over a decade. Adapted from consensual relative poverty metrics developed in the UK and Sweden, BNS data can be used to calculate a Well-being Index (WBI) that is locally relevant and comparable. To demonstrate its applicability in a lower-income context, we present findings from the Ituri Region of the Democratic Republic of the Congo (DRC) where over 2,000 households were surveyed using the BNS tool in 2015, 2017, and 2019. WBI scores were lower among traditionally vulnerable and marginalized groups: Indigenous and female-headed households, those with young or elderly heads, and households that were smaller or had high ratios of dependents. WBI varied with livelihood and geography and was sensitive enough to detect group-specific changes over a short time; namely an economic shock concentrated in villages along the main local highway in 2017 when the DRC experienced a major currency devaluation. Scores can be calculated to either incorporate or isolate variability in subjective expectations about what constitutes well-being; we show that expectations differed for Indigenous households and expectations rose faster than assets in this period. Findings build confidence in the utility of this type of locally informed multidimensional well-being metric in low-income regions. Those seeking practical instruments to produce flexible and regionally comparable well-being measures may wish to consider this approach.

Mercosur at 30: political ideologies and (de)legitimation strategies

Abstract Mercosur celebrated its 30th anniversary in 2021 in a situation of severe stress, in which the idea of rolling it back from a customs union towards a free trade area was discussed in polarized terms, raising the question about its legitimacy. This article analyses the legitimation strategies pursued by Mercosur member states' presidents and regional bureaucrats to build, maintain, defend and enhance the belief among relevant audiences that the regional organization is legitimate. It focuses on three critical moments in which Mercosur was the object of public debate, namely, the Brazilian currency devaluation in 1999, the accession of Venezuela in 2012, and the current proposal of ‘flexibilization’, and, drawing on secondary literature and qualitative content analysis, argues that the origins of Mercosur agents' discursive legitimation strategies are their political ideologies. Given the strong role of presidents and lack of stronger regional institutions and leadership, Mercosur is left hostage to domestic electoral cycles and vulnerableto undemocratic trends of governments in power.

Analysis on IMF Loan Conditions with more Detrimental Impact on the Economy: A Case Study of Nigeria

Past studies have shown that nations that borrow money from the International Monetary Fund (IMF) have greater rates of poverty, unemployment, and inflation than countries that do not borrow from the IMF. This is despite the fact that the IMF claims that fostering economic development is one of its objectives. The IMF loans conditions that are shown to have the most detrimental impact on economies are the subject of this study, which focused, specifically on Nigeria. In order to obtain data for this research, primary data sources such as official documents, newspapers, journals, and other similar sources were utilized, and Neoliberal theory was employed as the theoretical foundation for the study. Our research showed that the IMF loan conditions of currency devaluation and subsidy removal negatively impacted not just Nigeria’s economy but also the nation’s overall standard of living. As a result, it was recommended that the government should make an effort to diversify the economy, modify its relations with international financial organizations like the IMF and the World Bank, and give the populace access to the necessary resources to improve their standard of living.