This was disclosed yesterday, by the Director General of Debt Management Organisation (DMO), Dr. Abraham Nwankwo, in Calabar, the Cross River State capital.
In an interview shortly after the commencement of a workshop on “Effective Sub-national Debt Management for Top Policy Makers of the States in Southern Nigeria,’’ Nwankwo explained that since power supply had remained a hydra-headed problem, government was determined to utilise the bond judiciously.
“All borrowed funds must be utilised. Even the $1billion Eurobond that has been sourced, the DMO will ensure that the projects in the power sector are closely monitored. We are not only going to ensure close monitoring, but we will also make sure that the findings are reported from time to time,’’ he said.
The $1billion Eurobond offering meant to finance power projects across the country was four times oversubscribed, following high investors’ demand locally and internationally.
State governments, he maintained, were free to borrow internally and externally including the international capital market provided they meet the requirements set by the federal government as the Goodluck Jonathan administration was not ready to take chances.
The requirements include: getting the approval and guarantee of the Federal Ministry of Finance and also fulfill the conditions of the Securities and Exchange Commission (SEC) and the possibility of repaying the loan at the agreed time.
He said there were various levels of control and supervision of internal and external borrowing with conditions attached, stressing that what applied to private companies that borrow also applied to state governments, as the current administration was not ready to tolerate indiscriminate borrowing.
Nwankwo maintained that since the workshop was part of the substantial debt management support project, the challenges facing the DMO now was how to ensure that it sustain the achievements recorded in the last five years and in the main take Debt Management Department to the local government levels.
Asked to reveal Nigeria’s current debt portfolio, the director general was evasive, saying: ‘’Nigeria’s indebtedness by all standards is sustainable. The federal government is focusing on value for money, that is, how borrowed fund is used judiciously, especially that from the international capital market”. He added further: ”We have a unit monitoring the utilisation of such borrowed funds.’’
The DMO boss said since Nigeria was operating a vibrant fiscal federalism with the federating units enjoying fiscal autonomy, there was the need to ensure effective coordination and sufficient congruence vertically and horizontally to ‘’maximise synergy for growth, development and poverty reduction.’’
According to him, “The DMO is committed to working with all the states of the federation and the FCT to ensure effective and prudent public debt management at the sub-national level. Effective public debt management is an essential part of effective public financial management, the latter of which is an essential component of macro-economic management.
“That is why over the past five years, the DMO has worked with the states of the federation, in a rare case of cooperative federalism, to build debt management institutions and competencies across the country,’’ he said.
Cross River State Governor, Mr. Liyel Imoke, represented by his deputy, Mr. Efiok Cobham, advised participants “to come up with sustainable strategies that will enhance debt sustainability and management, and also fashion a holistic approach to management of public debt that will allow for further infrastructural development.’’
Information from This Day was used in this report.