The Debt Management Office (DMO) on Monday said that the Federal Government of Nigeria has relied on debt to finance over 90 percent of deficits contained in its Annual Appropriation Acts. Patience Oniha, Director General DMO, who disclosed this on Monday also informed that public debt was instrumental in helping Nigeria bounce back from the recession caused by economic shocks which put a strain on the country’s revenue.
Speaking at the Executive Leadership Workshop organised for Senate Committee on Local and Foreign Debts and House Committee on Aids, Loans and Debt Management in Niger State, Oniha however, said the government understands the need for caution when borrowing, especially with mounting public debt and rapidly increasing debt service obligations.
“It is true that the public debt has been growing. We should remember that Nigeria has witnessed economic shocks with major impacts on revenue that have resulted in recession twice and borrowing was a major tool for reversing the trends. However, going forward, there should be a strong emphasis on revenue generation from multiple sources other than crude oil to ensure that debt is sustainable”, she explained.
According to her, those initiatives that have been introduced to finance capital projects through Public-Private Partnerships should be sustained to curtail the need for direct borrowing by the Government to fund infrastructure projects. Speaking further, the DG said the DMO successfully developed the domestic fixed-income security market which has created access for Nigerian corporates in the international capital market through products such as Nigerian Treasury bills, FGN bonds, Savings bonds, Sukuk, Green bonds, Eurobonds, and Diaspora bonds.
She informed that since 2017, when the DMO started issuing Sukuk on behalf of the Federal Government, over N365 billion proceeds have been realised in the issuances, while over $12 million worth of Eurobond has been issued since 2011. The DG said the workshop was being organised for lawmakers to broaden their knowledge on borrowings – how it is done and why it is done.
”Public debt and debt management are at the interest of the public at large, and because the National Assembly has the power as contained in the DMO Act and the Fiscal Responsibility Act to approve those borrowings, it only means they should be knowledgeable about debt; how we borrow and what type of instruments we borrow, and to know about the levels of debt stock so that when requests are made to them to approve new borrowings, they have an understanding of it. This will make them better informed and also help us improve on our work,” she said.
According to Oniha, the workshop was “holding at a most auspicious time, when public debt has become very topical in the local and international environments. Phrases such as debt transparency, fiscal deficit, debt burden, debt trap, default, etc., have become the subject of analysis and media write-ups almost on a daily basis. The DMO recognises that borrowing should be done with caution to meet developmental and sometimes, social needs and that proceeds are deployed judiciously,” she stressed.
In his keynote address, Clifford Ordia, Senate Committee Chairman on Local and Foreign Debts, said debt is a veritable tool for economic growth and development if properly managed. He added that effective debt management that emphasizes transparency, due process, and fiscal discipline can precipitate a turnaround in the economy.