NDMF fails to explain ratio of revenue FG should spend on debt service- Expert

The newly released third National Debt Management Framework (NDMF) 2018-2022 has failed to explain what ratio of revenue the Federal Government should spend on debt service, Director of United Capital Market, Egie Apata, has said.

Apata, who was speaking on a business programme on television, said the framework is the same as the previous report that ended in 2017 with the only difference being the inflation document that has been taken off.

He noted that there have been improvements over the years with the framework in terms of getting accurate information and being clear on what the strategy is about, especially with the state and federal levels, but that it constantly omits reference to revenue.

“So all talk about the amount of debt to GDP, what ratio of revenue you should spend on debt service is omitted,” he said.

He noted that debt service, which is still over 60 percent, is still a big challenge for the Federal Government.

Apata stated that without any structural changes, recurrent expenditure will trend upwards and will not come down in the sense that more agencies are being created and payrolls and salaries increase and even pension payment.

The newly released National Debt Management Framework (NDMF), according to the DMO, is a reference document, a compilation of Nigeria’s key debt management policies, strategies and frameworks and is expected to guide the activities and operations of Nigeria’s public debt management during the four-year period.

The framework includes the assessment of the implementation of the NDMF for 2013-2017, in terms of realization of its objectives and the challenges encountered on public debt management, and expectations of the future.

It was designed to ensure that government’s borrowing activities were conducted in accordance with statutory provisions and regulations, as well as international best practices incorporated in the broad objective and strategic objectives of the public debt function, as captured in the DMO’s strategic plan 2018-2022.

It is aimed to review the performance of the total public debt portfolio, in terms of costs and risks, by reference to the targets in the NDMF, 2013-2017; to implement aspects of the NDMF, 2013-2017, which were still relevant for the period, 20182022.

It is also aimed to incorporate the subsisting debt management strategy, 2016-2019, including the various public debt targets; to reflect and incorporate developments in the domestic financial market and the international capital market; and to review the external and domestic borrowing guidelines for federal, states, Federal Capital Territory, and their agencies.