Macroeconomic stability is a vital requirement for sutainable economic growth Ibikunle laniyan the blogger examines its strategic imperatives to sustainainble economic growth. When an economy has minimised the vulnerabilities to external shocks and then increases its prospect for sustained growth,in economic parlance, we call it macroeconomic stability.Contextually,in the global market ,it acts as a buffer against currency and interest rate fluctuations, though a vital but inadequate requirement for growth.The root of economic crisis and a crash in G.D.P. can easily be linked to exposure to currency fluctuations , high debt burdens,despicable and unmanaged inflation. Note, not just the I.M.F. and the E.U., the developing economies should place more emphasis on macroeconomic stability for sustainainble economic growth.Little wonder, the Maastricht Criteria measured stability by its five factor variables.They include low and stable inflation, low long term interest rates, low national debt relative to G.D.P.,low deficit and currency stability. While currency stability allows exportimporters to evolve long term growth strategies, reduces investors 'needs to manage exchange rate risk and also due to national account ing,reduces threat posed by debt issue in external currency, with 2.5% maximum permitted fluctuations; low deficits prevent growth in national debt, capped at 3percent according to Maastricht criteria. Unstable inflation threatens growth, with unhealthy demand at the market place.Ominous inflation alters the value of longterm contract, increases risk premium and uncertainty in the market place.Given the adjusted nature of many tax rates, by average inflation, volatile inflation tends to decimate government revenues ad trigger individual liabilities. Maastricht criteria capped inflation maximum at 3%.However keeping inflation low implies the stability of the economy and Maastricht restricted long term interest to 9percent. Using tax revenues in terms of low national debt to G.D.P.to address domestic needs of the economy is determined by government flexibility or policy Ideology rather than my he pressure to pay external contract ors.The incentives of lenient fiscal policies during economic crisis period, are permitted by low national debt. Maastricht capped it at 60prcent of G.D.P.
MICRO FINANCE unknown to many is the sole panacea to mass poverty eradication in human society.The blog specifically focuses on the industry around the world but with more bias on Africa-unarguably the poorest region of the world.
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