- DMO seeks legislation for sub-national debt management
Adibe Emenyonu in Benin City
The Debt Management Office (DMO) has said the debt stock of the 36 states of the federation and the Federal Capital Territory (FCT) grew to N4.776 trillion in June 2018 from N2.256.23 trillion in December 2014, representing an increase of 111.7 per cent .
The DMO Director General, Ms. Patience Oniha, disclosed this in Benin, Edo State at a one-day sensitisation workshop on sub-national debt management for top policy makers in the South-east, South-south and South-west geo-political zones.
Oniha said with the significant growth in states’ debt stock and the FCT, there was an urgent need to upscale debt management capacities at the sub-national level.
She advised the states and FCT to take necessary steps to enact relevant legislations, policy frameworks as well as guidelines to equip the debt management units or departments in their respective jurisdictions.
Oniha said there was the need for governors and other public office holders to be diligent in spending government funds, asserting that public debt management was unique and dynamic, which made it imperative for the review of legal and institutional frameworks.
The director general explained that the workshop was targeted at top policymakers in the states and the FCT to increase their awareness on the strategic importance of effective public debt management, and to solicit their support for actions, such as the enactment of laws and formulation of policies that are needed to ensure that public debt is sustainable.
‘’DMO in its capacity, manages the federal government’s debt, while also collaborating with and having some over-sight duty in the borrowing activities of the state governments. It is within this role that the DMO is partnering with the 36 states, and the FCT for the purpose of enhancing debt management policies and practices at the sub-national level.
“DMO’s two aim for its activities with sub-national governments are to build effective debt management institutions and facilitate the enactment of appropriate legislations on public debt management. Borrowing is a beneficial fiscal tool for promoting growth and development. We know and have seen instances where the reverse is the case when debt becomes a burden,’’ she stressed.
The DMO chief executive stated that the most vital benefit of the workshop on sub-national debt was that it would improve economic health and development in Nigeria.
Declaring the workshop open, Edo State Governor, Mr. Godwin Obaseki, said borrowing was not bad, provided the money borrowed was used to provide basic infrastructure for the people.
Obaseki stressed that his state could still borrow if there was the need to do so, provided it is for the purpose of socio-economic and political advancement.
He disclosed that currently Edo State did not owe any commercial banks, adding that the state was borrowing to mobilise contractors and suppliers for more infrastructure.