The US Government shut down has been in the news for over a week now. I expect you should know if you exist in the social network ecosystem or at least listen to the news or read the papers. Nevertheless, the shut down is as a result of the US congress disagreeing over approving funding for the US government because the republicans want to tie it the approval to a cut in some provisions in Obamacare.
Whilst it is not enough to shower the rest of the world with news of the shutdown, it appears that somehow, due to globalisation we may also feel the impact of the shutdown if things are not resolves quickly. Hows is that? Well this is what Okonji Iweala had to say;
- It could affect Nigeria’s $500million Bond and the Euro Bond. The Euro Bond is required by the Nigerian Government to help finance critical infrastructure such as roads, hospitals, schools etc. No one will be willing to buy the bond if the shutdown continues.
- If the crisis lingers, it would also affect interest rates – The interest rates that we pay on our foreign debts could suddenly rise as investors will stop financing our short term debts creating an artificial pressure that is likely going to send interest rates up
- The shutdown will affect price of oil, and because Nigeria is an oil exporting country, she’ll be affected. The US is one of our major buyers of Crude. If that happens the government may find it hard paying civil servants, contractors etc.
- Exchange rate could also rise as portfolio investors will probably move their investments out of emerging economies like Nigeria for fear of a contagion. This may affect our stock market as well as price of goods and services
- It may affect Visa operations at the US embassy in Lagos and Abuja – If the shutdown continues then it is likely that foreign embassies like the one in Nigeria may have to reduce their daily activities to accommodate for the shortfall in funding.
Don’t be dismayed, this impasse will not only affect Nigeria. It will likely affect the world economy if it is not resolved soon enough.