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The merits and demerits of debt and tax finance for deficit financing are often debated. The choice of one method depends on the objective and overall long-term implications for the economy.
Required:
a. Explain the following:
i. Debt refinancing (1 Mark)
ii. Why debt refinancing may be of interest to a federal authority (4 Marks)
iii. Project financing (2 Marks)
b. Explain FOUR forms of debt refinancing. (8 Marks)
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External debt does not constitute a burden when contracted loans are optimally deployed and the return on investment is sufficient to meet maturing obligations, as and when due, while servicing of the domestic economy is not undermined. The magnitude and severity of debt burden cannot be determined on the basis of debt volume only, rather, the debt volume should be viewed in combination with certain debt ratios for better appreciation of the debt problem.
Required:
Discuss THREE ratios commonly used to analyze the degree of indebtedness of a country and explain TWO sources of external debts.
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Debt management is a key component of public finance management that enables the government to meet its financing needs at minimum costs and within acceptable levels of risk. One of the diagnostic tools that the government uses in managing its debt portfolio is to conduct an annual Debt Sustainability Analysis (DSA).
Required:
Explain the term “Debt Sustainability Analysis,” identifying its THREE objectives and FIVE benefits.
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Find Related Questions by Tags, levels, etc.
The accumulation of external debt is a common phenomenon in developing countries at the stage of development where external resources are needed to bridge budgetary gap.
Required:
a. Explain what is meant by External Debt. (3 Marks)
b. Discuss the causes and likely adverse consequences of the rising level of Nigeria’s total external debt stock. (12 Marks)
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As a result of privatisation and commercialisation exercise currently going on in the country, the Ministry of Transport sold the assets and liabilities of the newly constructed standard gauge railway to a private company known as Stalus Rail Limited (SRL) to ensure smooth operations of the railway services by freeing it from government bureaucracy.
The summarised extracts of the statement of financial position at fair value of SRL on January 1, 2019, reflecting the terms and conditions of the sales agreement of the Transport Ministry are as follows:
| N’m | Assets |
|---|---|
| Goodwill | 150,000 |
| Operating licence | 900,000 |
| Property – Train stations and land | 225,000 |
| Rail tracks and coaches | 225,000 |
| Two (2) train engines | 750,000 |
| Total Assets | 2,250,000 |
Liabilities:
The operating licence is for a ten-year period issued on January 1, 2019, by the Transport Ministry and is stated at cost. The carrying value of the property and rail track and coaches is based on value in use, while the engines are valued at their net selling prices.
On February 1, 2019, one of the train engines got damaged due to a technical fault from the manufacturer and was completely destroyed. The sale of the assets to SRL was without recourse to the Transport Ministry or the manufacturer of the engines.
In view of this, it was estimated that there would be reduced passenger capacity, and the estimated value in use of the whole train service business of SRL was assessed at N1,500 billion.
The number of passengers after one of the engines was damaged was below expectation, even allowing for the reduced capacity. Consequently, the value in use of SRL rail services was re-assessed on March 31, 2019, at N1,350 billion. On this date, SRL received an offer of N675 billion from Papaya Railway Services Limited (PRSL) for the operating licence (since it is transferable). The realisable value of the other assets has not changed significantly.
Required:
a. Draft a memo addressed to the MD of Stalus Rail Limited (SRL) explaining the basis of allocating an impairment loss to the assets of a cash-generating unit in accordance with IAS 36 on impairment of assets.
(6 Marks)
b. Calculate the carrying amount of the assets of SRL Limited as at February 1, 2019, and March 1, 2019.
(10 Marks)
c. Explain TWO conditions that must exist before an impairment loss can be reversed.
(4 Marks)
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A national economy requires the involvement of government to thrive, and its presence supports citizens’ livelihoods.
Required:
i. Identify and explain FIVE reasons why the government intervenes in the economy. (7.5 Marks)
ii. Identify and explain FIVE macroeconomic objectives in Nigeria. (7.5 Marks)
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In order to achieve some development objectives, nations place emphasis on priority programmes like the provision of basic infrastructure and development projects, all of which require appropriate funding.
Required:
a. By means of specific relevant examples, distinguish between “basic infrastructure” and “development projects”. (3 Marks)
b. Discuss TWO development objectives which the priority programmes you refer to in (a) above are planned to achieve. (4 Marks)
c. Identify TWO sources of funding for these priority projects stating TWO distinct characteristics of each source identified and TWO factors that facilitate the commercial viability of the projects. (8 Marks)
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Public finance is concerned with the income and expenditure of public authorities and with the adjustment of one to the other. Also, it opines that the subject matter of public finance looks into the financial problems and policies of the government at different levels and studies the inter-governmental financial relations.
Required:
a. Identify and explain FIVE categories of public finance. (7½ Marks)
b. Discuss FIVE rationale for public sector in the economy. (7½ Marks)
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In Nigeria, public revenue belongs to its citizenry and is allocated to them through the National Revenue Mobilisation, Allocation and Fiscal Commission.
a. State and explain FIVE principles that guide revenue allocation in Nigeria. (7½ Marks)
b. Explain FIVE factors that led to the controversies surrounding revenue sharing in Nigeria. (7½ Marks)
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The ministry of finance of Ojaja Republic prepared the aggregate Medium-Term Expenditure-Framework (MTEF) budget for consideration by the National Assembly as contained in the country’s Constitution. The following are the MTEF actual budget estimates and the approved budget estimates by various sectors as thoroughly screened by the Budget Committees of the Senate and House of Representatives:
Ojaja Federal Republic Summary of total budgeted expenditure by sector for 2020
| Sector Code | Sector Name | Actual Estimates 2020 (N’m) | Approved Estimates 2020 (N’m) |
|---|---|---|---|
| 01 | Administrative Sector | ||
| Personnel Cost | 40,000 | 34,000 | |
| Overhead Cost | 25,000 | 21,250 | |
| Consolidated Revenue Charges | 18,600 | 15,810 | |
| Capital Expenditure | 62,400 | 53,040 | |
| Sub-Total | 146,000 | 124,100 | |
| 02 | Economic Sector | ||
| Personnel Cost | 22,500 | 20,250 | |
| Overhead Cost | 12,600 | 11,340 | |
| Consolidated Revenue Charges | 28,600 | 25,740 | |
| Capital Expenditure | 41,300 | 37,170 | |
| Sub-Total | 105,000 | 94,500 | |
| 03 | Law and Justice Sector | ||
| Personnel Cost | 15,800 | 15,800 | |
| Overhead Cost | 20,200 | 20,200 | |
| Consolidated Revenue Charges | 17,500 | 17,500 | |
| Capital Expenditure | 38,500 | 38,500 | |
| Sub-Total | 92,000 | 92,000 | |
| 04 | Regional Sector | ||
| Personnel Cost | 40,800 | 38,760 | |
| Overhead Cost | 22,200 | 21,090 | |
| Consolidated Revenue Charges | 16,700 | 15,865 | |
| Capital Expenditure | 32,300 | 30,685 | |
| Sub-Total | 112,000 | 106,400 |
Summary of total expenditure by sectors:
| Description | Actual Estimates 2020 (N’m) | Approved Estimates 2020 (N’m) |
|---|---|---|
| Personnel Cost | 119,100 | 108,810 |
| Overhead Cost | 80,000 | 73,880 |
| Consolidated Revenue Charges | 81,400 | 74,915 |
| Capital Expenditure | 174,500 | 159,395 |
| Total | 455,000 | 417,000 |
Additional Information:
(i) Administrative sector – all costs at an incremental basis of 15%, except for capital expenditure which will increase by 10%.
(ii) Economic sector – all costs at an incremental basis of 25%, except for overhead cost which will decrease by 5%.
(iii) Law and justice sector – all costs at a declining basis of 5%, except for personnel cost which will increase by 10%.
(iv) Regional sector – all costs at an incremental basis of 10%, except for consolidated revenue charges which will decrease by 15%.
Required:
a. Prepare proposed budget estimates for 2021, 2022, and 2023 based on the approved estimates for the year 2020. (20 Marks)
b. Explain the following in relation to National Chart of Accounts (NCOA) structure for budgeting:
i. Functional segment (2 Marks)
ii. Programme segment (2 Marks)
iii. Geographical segment (2 Marks)
c. Enumerate FOUR steps required for budgeting with the National Chart of Accounts. (4 Marks)
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“An equitable system of public finance aims at even distribution of income and wealth among the various sections of a country.”
You are required to discuss the following:
The income distribution function and any THREE instruments that could be used by government.
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(b) The public sector is the driver of the economies of many developing nations. Public Finance Management has become a focus of attention in these economies. Development partners have therefore drawn the attention of governments to the Nolan Committee’s report on Standards in Public Life.
Required:
Discuss SIX of these principles for public office holders and show how they can enhance performance in the public sector. (6 Marks)
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Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Government, like any other economic unit, needs funds which can be raised from various sources for the purpose of financing its activities. Public revenue refers to income generated by government from its activities or operations.
Required:
a. Discuss the TWO dimensions or patterns of revenue sharing in a Federation. (5 Marks)
b. Explain FIVE principles of revenue allocation. (10 Marks)
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Find Related Questions by Tags, levels, etc.
National Chart of Accounts (NCOA) shows the complete list of budget and Accounting items for General Purpose Financial Reporting System (GPFS) and budgeting.
Required:
a. Identify FOUR characteristics of National Chart of Accounts. (4 Marks)
b. Discuss the SIX structures of the National Chart of Accounts for budgeting. (6 Marks)
c. Discuss FIVE problems associated with debt conversion programmes in a country. (10 Marks)
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Find Related Questions by Tags, levels, etc.
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