The Debt Management Office (DMO) says it has raised the entire N1.18 trillion domestic component of the 2016 approved borrowing to fund the economy this fiscal year.
Addressing members of the Senate Committee on Local and Foreign Debts, the Director General of the DMO, Dr Abraham Nwankwo, said by raising the entire domestic stock, “Nigeria has successfully developed a strong domestic market”.
On the remaining N635 billion, which is to be borrowed from external sources, he said US$1 billion from the African Development Bank (AfDB), “but AfDB released $600 million”.
The Ministry of Finance, Nwankwo said, is working to secure the balance but the current economic situation is making the realisation a Herculean task.
However, Nwankwo noted, there is some good news because the government “can fall back on domestic borrowing”.
Nwankwo also told the senators that the “DMO is working to see that the $1 billion Eurobond is mobilised by second quarter of 2017”.
The DMO boss said the Federal Government was servicing its debt as at when due. According to him, of the N1.161 trillion to be serviced in 2016, the government had serviced N1.09 trillion.
“Nigeria is in a very strong position to service its debts because of our debt sustainability analysis, which ensures that we make sure that we do not go near threshold of borrowing and to avoid unsustainable debts, so we are operating miles away from the threshold,” Nwankwo said.
He assured the legislators that “we will build sustainable economy in the next three to five years.”
On the proposed $29.9 billion loan, Nwankwo told the senators that “the $30 billion loan will be borrowed over a three-year period, not at once. Drawdown of the loan will be done based on the progress of the work and it is essentially for infrastructure because we don’t have revenue at hand to provide infrastructure.”
These infrastructure he said, “will help reduce poverty. There must be no leakages, that should be our focus and there must be accountability. Investment of $30 billion should be in infrastructure that can repay itself.”
Internally, Nwankwo said the DMO had only received overhead allocations up to August this year “because of recession, so we are making sacrifice.” He also said that of the DMO’s capital expenditure (Capex) for 2016 (N87.3 million), only N33.79 million had been released.
“We are doing what we can with what we have to support the economy. We have advertised for tender to execute some capital items, hoping that the balance will be released,” he said.
Senator Shehu Sani, Chairman Senate Committee on Local and Foreign Debts, urged the DMO to rigorously pursue robust and effective debt management measures.
The committee, the senator, said “is suggesting a holistic review of the Debt Management Office Act to address current challenges of debt management.
“For example, an accounting officer who borrows money and misapplies such fund should be held accountable. There should be consequences for such misdemeanours,” Sani said.
On loan terms and conditions, the committee, he said, “will henceforth pay attention to the agreement on terms and conditions for loans obtained by government to forestall a situation where Nigerians are unnecessarily short-changed”.
Sani said: “A casual observation of construction sites of projects funded from EXIM Bank of China reveals that only foreigners are the engineers, architects and other professionals. Nigerians are only engaged as unskilled workers. This situation is unacceptable. Such agreement must be in tandem with our laws and should serve our collective interest ultimately.”
On the timeliness of receiving drawdowns from loans contracted by governments, Sani was shocked “to discover that Lagos State is yet to receive drawdown from the DPO lll the National Assembly approved since December 2015”. “The executive must streamline the process and eliminate unnecessary bottlenecks,” the senator said.
