The Debt Management Office (DMO) has called on all tiers of government to ensure effective management of debts to fast-track economic development.
Dr Abraham Nwankwo, Director-General of the Office, made the call when the Senate Committee on Local and Foreign Debts visited the office on over sight function.
“We continue agreeing with the National Assembly, with the people of Nigeria but the most important thing is for these borrowed monies and un-borrowed monies to be used well, effectively, efficiently with minimum linkages; and something to show for it. The most important thing as you have implied is when states borrow, let them make good use of what they borrow because if states borrow money that will be repaid over 40 years.
“And they use it to build a road; of cause, the road does not last for five or seven years if they are well maintained, so future generations will still use the road.”
Nwankwo said that the DMO had continued to offer advice to state governments as it concerned their debt management, adding that all the debt profile of states of the federation had be re-constructed. According to him, the DMO will announce the states domestic debt profile.
He said that states had been advised not to use more than 40 per cent of their monthly allocation from the federation account to service debt.
He said that states had also been encouraged to improve on the means to grow their internally generated fund as an alternative means to finance their projects. Commenting on state of the Nigerian bond in the international market, the director general said that Nigerian bond had been trading well and had opened doors for private sector to get bond at the international market. He said that it was the performance of the bond that led to the listing of Nigeria’s bond in the JP Morgan Sovereign debt index.
Nwankwo urged the legislators to approve the borrowing programmes, saying that “we have done the sustainability analysis and see what the picture looks like.
“We will make sure that we did not get to the dangerous threshold.” He solicited the committee’s support to ensure a favourable working environment and improved remuneration for its staffers.
“This is an area that we want you to help us in any way you could. In 2007, as soon as I assume this position, we worked out and got a prime piece of land at the Central Business District. But we cannot develop it because of budgetary constrains but I believe that if all the authorities put their heads together, the National Assembly, our committee, there should be a way to make sure that this unique institution is helped to have its own office building.’
Responding, Chairman of the committee, Sen. Ehigir Edobor Uzamere, said that the visit was basically a fact-finding one; to see how well the office had utilised the money released to it in the 2012 budget.
“The DMO is performing a very important crucial and unique role in our country particularly in our current economic and development challenges. As a developing economy, we cannot meet our infrastructural developmental needs through budgetary allocation. Hence we have to borrow to develop our infrastructure.”
According to him, the DMO must ensure effective management of debt, noting that the committee’s stand is that the Federal Government should not borrow to finance budget deficit.
He assured that the Senate would support the DMO to enable it perform its duties effectively. Also, Sen. Gbenga Obadare, tasked the office to check consistent borrowing and called for stringent measures to reduce borrowing by state governments. “There is need for them to prioritise what their needs are and not to borrow anyhow and leave the states indebted,” he maintained.
