Inter-Sectoral financing

Abstract

The paper examines the continued increase in the activities of the financial transactions market in 1982 among which include the following markets: Other Debt (N 3,926.4 million), Government Loans and shares (N 2.412.0 million). Domestic Loans and Advances (N 2,087.0 million). Besides. Federal Debt increased by N 2,469.4 million. Another major area of activity is the Foreign Assets market where there was a decline of N 1,738.2 million compared to the 1981 position. The author reveals that as in 1981, the total financing needs of the economy could not be met entirely from domestic sources, resort had to be made to external sources to provide the shortfall of N5,293.2 million.Similarly, Insurance Companies as well as Commercial Banks had deficits of N94.7 million and N 32.7 million, respectively for which they had to seek funds to enable them reach equilibrium. Conclusively, it is recommended that there should be a provision of short-term capital by way of defferred payments on merchandise trade. This will considerably increase over the 1981 position of N 332. 7 million. The increase in the short-term capital transactions by the Rest of the World had the effect of reducing the size of the sector's claims on domestic sectors on account of foreign exchange. Next in importance as a use of funds is the reduction of the Rest of the World liabilities in foreign assets market by N 1,285.5 million. The sector invested in Federal Government debt instruments to the tune of N 493.4 million.