Nwankwo: Nigeria Robust to Service All Debts
Senate committee moves to amend laws to strengthen DMO
James Emejo
The Director General, Debt Management Office (DMO), Dr. Abraham Nwankwo, yesterday said the country was currently in a position to service all its debts as and when due despite the fiscal shocks occasioned by the collapse of oil prices.
He maintained that Nigeria’s economic fundamentals remained strong and robust, adding that till date, the country has continued to service all its debts as and when due following the DMO’s debt sustainability analysis carried out yearly.
He disclosed that out of the N1.361 trillion appropriated for debt service in 2016, debts worth N1.094 trillion had already been serviced.
Nwankwo further said the DMO, working with other agencies was doing its best to mobilise additional resources from the proposed eurobond by end of the first quarter of 2017.
Speaking in Abuja during a presentation to the Senate Committee on Local and Foreign Debts, led by its Chairman, Senator Shehu Sani, which was on an oversight function to the debt management agency, Nwankwo also said of the total N1.818 trillion borrowing for 2016, the domestic component of N1.18 trillion had already been realised while the remaining dollar equivalent of N635 billion was expected to be raised from external sources.
To that end, he said the sum of $600 million had also been approved by the African Development Bank (AfDB) out of the $1billion external loan expected from the institution.
The DMO boss said the success in raising the loans locally showed the country had been able to develop a strong domestic bond market to meet the needs of both government and private investors.
He added that the domestic bond market remained a major fallback for the country should external borrowing prove difficult.
However, he said Nigeria’s debt to Gross Domestic Product (GDP) ratio was currently 20 percent compared to the 56 per cent prudential threshold.
He said though “we still have enough space to manoeuvre, and as much as we needed money, we’ve shied away from getting close to the threshold.”
Pressed by the lawmaker to expertly advise the federal government on its proposed $30 billion loan which had generated controversy, Nwankwo said the borrowing shouldn’t be a major concern rather the focus should be on ensuring that borrowed funds are guarded against leakages as well as ensuring that the funds are used for the purposes for which they are borrowed.
Specifically, he said budget implementing agencies including ministries, departments and agencies of government (MDAs) should be made to properly account for all monies spent on various projects.
He said efforts must be made to ensure nobody misuse borrowed funds.
According to him, the seeming massive fiscal expansion was inevitable if the country must exit the current recession, adding that current efforts to diversify the economy from oil could only be achieved through massive investment in infrastructure.
The DMO boss further assured international investors and all stakeholders that with the country’s strong resource base and dedicated leadership, it was only a matter of time before the “temporary challenges” were overcome.
He further explained that there wouldn’t have been any need to borrow if government had the needed revenues to development critical infrastructure, a situation which made it mandatory to resort to massive borrowing- though still within approved limits.
Nwankwo said it had become necessary to make massive investment in infrastructure in order to make the economy competitive.
Shehu, however, commended Nwankwo for the professionalism employed for sustainable debt profile for the country.
He said as government resorted to borrowing to rejuvenate the economy, extra care must be taken in order not to jeopardise the future of younger generation.
He said DMO’s role at this critical time could not be overemphasised, adding that a robust debt management measures must be pursued vigorously at all times.
The lawmaker also said the committee was suggesting a holistic review of the debt management Act to address current challenges in debt management in the country.
Specifically, he argued that an accounting office who borrows money and misapplies such funds should be held accountable.
There should be consequences for misdemeanor, he said.
The chairman further directed the DMO boss to make an amendment proposal on how to make debt management office more attractive and thus retain good hands in its workforce.
He also said the committee would henceforth pay attention to agreement on terms and condition of loans obtained by government to forestall a situation where Nigerians are unnecessarily shortchanged.