By Emma Ujah, Abuja Bureau Chief & Victoria Ojeme
The Debt Management Office (DMO) has recognised the need to borrow with caution and to ensure the prudent utilization of borrowed funds.
The Director-General of the DMO, Ms. Patience Oniha, speaking at a workshop for members of the Senate Committee on Local and Foreign Debts, as well as, the House Committee on Aids, Loans and Debt Management, at Zuba in Niger State, yesterday, stated: “The DMO recognises that borrowing should be done with caution to meet developmental and sometimes, social needs, and that proceeds are deployed judiciously.
‘‘In addition to this position, New Borrowings are undertaken in compliance with legislations and public debt is managed in accordance with international best practice. In the case of the latter, the DMO undertakes an annual Debt Sustainability Analysis and is guided by a Medium-Term Debt Management Strategy which is prepared every four (4) years.”
She spoke against the backdrop of concerns raised in many quarters over the continuous external borrowing by the federal government and the rising stock of public debt in the country.
She said that the DMO has been very meticulous in the discharge of its mandate credibly by maintaining a clean database of public debt of both the federal and state governments, as well as that of the Federal Capital Territory.
Oniha noted that public debt has been growing and expectedly, debt service, adding however, that the public “should remember that Nigeria has witnessed economic shocks with major impact on Revenue that have resulted in recession twice and borrowing was a major tool for reversing the trends.”
She added, “The DMO has raised Funds for New Borrowings in the Appropriation Acts to meet the Government’s financing needs and has been responsible for financing over 90 percent of the deficits in the Annual Appropriation Acts. Another very important role which the DMO has played through its borrowing operations is the development of the domestic fixed income securities markets.
“Closely related to this is the access which it has created for Nigerian corporates in the International Capital Market. These have been achieved through various products: Nigerian Treasury Bills, FGN Bonds, FGN Savings Bonds, Sukuk, Green 2 Bonds, Eurobonds and a Diaspora Bond. In this important developmental role, the DMO has won a number of awards locally and international from credible organisations.”
Oniha advised a greater adoption of Public Private Partnerships (PPPs) to fund more infrastructure projects, in order to borrow less.
She stated, “Going forward, there should be a strong emphasis on revenue generation from multiple sources to ensure that debt is sustainable. In addition, the initiatives that have been introduced to finance capital projects through Public-Private Partnerships, should be sustained to reduce the need for direct borrowing by the Government to fund infrastructure projects.”
In his remarks, Senate Committee chairman on Local and Foreign Debts Sen. Clifford Ordia, called on the members to have a second look at the Debt Management Office Establishment Act, 2003 with a view to amending it to meet the realities of the present situation.
According to him, ” A clearly defined policy must be articulated or reviewed by the government to streamline projects that loans can be obtained for. ‘‘As a committee, we will give priority to projects that will develop human capital and critical infrastructures that have the potential to generate revenue and create employment.’’