Agency Puts Nigeria’s External Debt At $11bn

Abraham nwankwo.The Debt Management Office (DMO) in Nigeria, says the nation’s external debt profile now stands at $11 billion with the domestic debt hitting 11 Trillion Naira (about $55.2 billion).

Giving a speech at a workshop held in Kaduna on Friday, the Director General of the DMO, Dr. Abraham Nwankwo, explained that despite the nation’s huge debts, the economy had remained resilient and diversifiable.

The enlightenment workshop on “Understanding Public Debt Management” was organised for Student Unions in Kaduna State, North West Nigeria.

Dr. Nwankwo explained that the states accounted for 18 per cent of the domestic debts while the Federal Government accounted for 82 per cent.

‘Gross Misuse Of Borrowed Funds’

He called on all tiers of government to utilise public funds for the good and development of the people, expressing worry that the ‘gross misuse of borrowed public funds’ by Public Officers contributes to the rising debt profile.

Dr. Nwankwo also stressed that the way to achieve good governance in Nigeria was for public office holders to run a transparent fiscal management.

“Government should draw on the positive side of borrowing,” he said, stressing that some developed nations depend heavily on borrowing to sustain their economies.

He specifically emphasised the need for the youths, as leaders of tomorrow, to develop the attitude and understanding of fiscal responsibility in order to hold their leaders accountable.

While encouraging state governments to source funds for developmental purposes, the DMO boss pointed out that the cynicism that usually trail decisions to borrow was due to the unpleasant cases where governments borrow money and misappropriate it.

He said that the misappropriation of borrowed funds had resulted in unsustainable debt portfolio.

The DMO boss, however, noted that under the President Muhammad Buhari’s administration, ‘the economy is becoming more robust’ and urged Nigerians to cooperate with the administration in order to achieve the desired change.

There has been consistent controversy over debt management in Nigeria.

The controversy includes primary objections to and justifications for borrowing.

Most of the objections focus on the interest cost that is created, the inflationary pressures that are associated with large-scale borrowing, debt illusion, crowding out effect and generational inequity of debt burden.

Today, the cry and protest over debt management are over non-sustainability of public debt, borrowing without due process, continued borrowing on non-concessionary terms and the use of loan proceeds for purposes other than those for which they were obtained.

It is for this reason that the Debt Management Office assembled students drawn from various higher institutions across Nigeria to sensitise them on how to monitor how such borrowed funds are spent.

Making their contribution, a representative of the students union, Salahudeen Lukman, advised both the State and Federal Government to ensure that all funds borrowed for development of the education and other critical sectors of the economy were judiciously utilised in order to ensure growth and development.

Delisting By JP Morgan Not A True Reflection Of The Nigerian Economy – DMO

JP-MorganThe Director General of the Debt Management Office (DMO), Dr Abraham Nwankwo, on Wednesday said that the nations de-listing by JP Morgan from its emerging market bond index is not a true reflection of the nation’s economy.

Speaking at a news conference in Abuja, Dr Nwankwo told reporters that their action must have been informed by the crash in the price of oil.

He said that the nation’s economy has remained resilient compared with that of other oil exporting countries, stressing that the federal governments bond is still vibrant.

According to Nwankwo, Nigeria’s removal from the index “does not amount to a downgrade of Nigeria or FGN Bonds since JP Morgan is not a credit rating agency.

“It does not have any impact on the quality of the FGN Bonds.

“They remain risk-free securities that are backed by the full faith and credit of the Federal Government and are charged upon the general assets of Nigeria.

“It does not imply that the bonds are no longer liquid.’’

Liquid Currency Criteria

The index provider said Nigeria would not be eligible for re-inclusion in the index for a minimum of 12 months. It added that to get back in the reading, Nigeria would have to satisfy the consistent liquid currency criteria.

Meanwhile, the Central Bank of Nigeria, in reaction to the notice, said “it disagrees with the index expulsion”.

The apex bank also said it had started to improve liquidity and transparency in the market, just as foreign exchange traders confirmed that U.S. Dollars rationing to foreign investors has begun.

Nigeria became the second African country after South Africa to be listed in J.P. Morgan’s emerging government bond index, in 2012. Its inclusion adds a 1.8 per cent weight to the index.

JP Morgan Chase and Co. delisted Nigeria from its Government Bond Index for Emerging Markets (GBI-EM) for alleged lack of liquidity for transactions and transparency in the determination of exchange rate.

JP Morgan added Nigeria to its index in 2012 and on January 16, it placed Nigeria on a negative index watch and finally delisted Nigeria on September 8.

JP Morgan is the largest financial services holding company in the United States and the world’s fifth largest bank with total assets of $2.6 trillion.

Lawmakers, Experts suggest Real Sector Development To Manage Debt

Abraham nwankwo.Nigerian Lawmakers and experts with the Debt Management Office (DMO) have prescribed the development of the real sector as a major solution to the challenge of keeping the nation’s debt within sustainable level.

At a retreat organised to enable the members of parliament and the DMO to rub minds on how to manage Nigeria’s debt situation to fit into the government’s economic transformation agenda, Nigeria’s debt profile was considered, with view to finding a reliable way of cutting it down.

Making a presentation at the 3-day retreat held at the Miccom Golf Hotel, Abuja on Saturday, the DMO Director General, Dr. Abraham Nwankwo, said that lesser government borrowings and creation of opportunities for the private sector to raise long term capital for the development of the real sector and infrastructure would reduce poverty in the nation.

Dr. Nwankwo told members of the House of Representatives Committee on Aids, Loans and Debt Management that Nigeria’s public debt profile as at September 2013 was $8.264 million which he said was 22% of the total GDP just as the Domestic debt profile as at September 2013 was also 7.032 trillion Naira.

However, he maintained that the level of the debt was still sustainable.

All the speakers emphasised the involvement and cooperation of Nigeria’s corporate businesses, as the sector could guarantee sustainability of the nation’s debt by leveraging on the existing sovereign benchmark to raise long term capital in the domestic market for the development of the real sector.

It is expected that the ideas that have been exchanged by the parliamentarians lead by Honourable Adeyinka Ajayi and the DMO, on the importance of debt management to the economic wellbeing of the nation, would help in solving Nigeria’s debt challenges.