Despite rising debt profile of the
nation, the federal government has been unable to develop a fresh debt
management strategy, seven months after the expiration of the Debt
Management Office’s (DMO) five-year Third Strategic Plan.......
Nigeria’s total public debt increased by
4.52 per cent in the first three months of 2018, the DMO had revealed,
stating that the country’s debt increased from N21.73 trillion in
December 2017 to N22.71 trillion at the end of the first quarter of
2018.
Yesterday, the prospect of the debt
portfolio became higher as Nigeria signed an agreement with France for
$475million loan facility for some projects in Lagos, Kano and Ogun
States.
The agreement was sequel to the visit of
the French President, Emmanuel Macron, to President Muhammadu Buhari at
the State House, Abuja yesterday.
According to a circular issued by the
DMO, the increase in the nation’s debt was largely as a result of the
increase in the domestic debts of states, and the Federal Capital
Territory (FCT), Abuja.
The agency added that the $2.5 billon
Eurobond issued in February 2018, with its proceeds still being deployed
to redeem maturing domestic debt, was also responsible for the increase
in the total public debt.
The share of the country’s “external
debt stock in the total public debt rose to 30 per cent as of March 31,
2018, compared to 17 per cent in 2015, 20 per cent in 2016 and 27 per
cent in 2017; a decline in market interest rates from 13 to 14 per cent
per annum in December 2017, to 11 to 13 per cent per annum in the first
quarter of 2018 due to the redemption of N279.67billion of Nigerian
Treasury Bills using some of the proceeds of the $2.5billion Eurobond
issued in February 2018,” the DMO had explained.
Findings by THISDAY showed that in spite
of the upward movement of the country’s debts, since the debt office’s
2013 to 2017 Strategic Plan expired last December it has not been able
to develop another one.
In response to THISDAY’s inquiries,
however, the DMO said it was working on the very important document,
even as it did not specify when it would be ready.
“We (DMO) are actively working on it. We
needed to do a Strategic Plan that incorporates the government’s
evolving needs and expectations of investors and financiers,” said Ms.
Patience Oniha, the Director General of the DMO, in a text message to
THISDAY.
Oniha was appointed exactly a year ago, after the retirement of the former Director General, Dr. Abraham Nwankwo.
Section 6(c) of the DMO Establishment
Act 2003 states that the agency must, “prepare and implement a plan for
the efficient management of Nigerian’s external and domestic debt
obligations at sustainable levels compatible with desired economic
activities for growth and development; and participate in negotiations
aimed at realizing those objectives.”
Owing to its very important role in the
economy, the DMO, since inception, has always operated with a strategic
plan. Its last strategic plan that expired last December, was the third
since the creation of the agency that manages the country’s debts by
former President Olusegun Obasanjo.
Its Second Strategic Plan, 2008-2012, followed the successful implementation of the First Strategic Plan, 2002-2006.
The expiration of the Second Strategic
Plan, coupled with the need to consolidate on the gains of the previous
plans, explore new areas and maintain a steady focus on the delivery of
its mandates made it necessary to develop the last five-year plan.
The debt office had explained that the
strategic objectives of the last plan were premised on the need to,
among other things, achieve a better balance between domestic and
external debt components in the public debt stock; re-focus attention on
cost-risk analysis and trade-offs and develop innovative means of
borrowing at minimal cost and prudent level of risk.
Others included to introduce innovative
debt instruments that will have positive impact on the public debt stock
and ensure its sustainability; sustain activities and execute new
initiatives to further deepen the domestic bond market in order to
ensure that it remains a reliable source of funding for all economic
agents, and retain, as well as, enhance the recognition's received for
the FGN Bond Market from international financial institutions.
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