DMO Issues N968bn Promissory Notes to Oil Marketers, States, Others

  • Plans to release new debt management strategy

Ndubuisi Francis in Abuja

The Debt Management Office (DMO) as at February 29, 2020 has issued a total of N968.092 billion promissory notes to oil marketers, states, federal agencies and exporters on behalf of the Federal Government of Nigeria (FGN).

DMO, a federal agency set up to centrally coordinate the management of Nigeria’s debt, released the data on its official website yesterday, detailing promissory notes it had issued up to February 2020.

By definition, a promissory note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money, either on demand or at a specified future date.

DMO’s data revealed that state governments received a total of N484.852 billion; oil marketers N266.072 billion; exporters N137.125 billion while federal agencies received N68.796 billion.

According to the DMO, all the promissory notes have maturity dates between 2019 and 2024.

The Federal Executive Council (FEC) had in April 2019 approved the establishment of a promissory note programme worth N3.4 trillion for the settlement of inherited local debts and contractual obligations of the federal government.

Promissory notes are sovereign instruments, negotiable and have liquid asset status, but non-interest bearing.

They enable the federal government to formally recognise and account for its true liabilities in line with the
International Public Sector Accounting Standards (IPSAS)
Meanwhile, the DMO is on the verge of releasing a new Debt Management Strategy (DMS), which sets out the modalities for debt management in the country.

A DMS details how the government intends to borrow and manage its debt to achieve a portfolio that reflects its cost and risk preferences, while meeting financing needs. It guides debt management decisions and on-going operations.
The aim of debt management is to raise the required amount of funding at the lowest possible cost over medium to long term consistent with a prudent degree of risk.

Based on latest figures, Nigeria’s total public debt stock, comprising federal and state governments as well as the Federal Capital Territory (FCT) stood at N26.2 trillion as at September 30, 2019.

A top official of the DMO told THISDAY that indication that the soon-to-be-released DMS may continue to give external sources of borrowing higher preference over domestic was given by the Director General of DMO, Ms. Patience Oniha recently, when she unveiled the nation’s debt statistics.

He said Oniha had disclosed that work on a new Debt Management Strategy (2020-2023) was being finalised by her agency and would soon be sent to the Federal Executive Council (FEC) for approval.