By Peter OBIORA investadvocate

Nov 02 2010 15.31 GMT

Lagos        (INVESTADVOCATE)-The Debt Management Office (DMO) has put the domestic debt profile of 13 states across the six geo-political zones to N200 billion after its computerisation of Domestic Debt data Reconstruction (DDR) exercise.

 

Abraham Nwankwo, Director General (DG) of DMO, made this affirmation Tuesday November 02 2010 in Lagos Nigeria at a media parley with Financial Journalist.

 

“This has placed them in the vintage position of having a harmonised computerised total public debt database; which indicates total State debt obligations vis-à-vis available State resources and other commitments at a specific period of time” he said.

 

Nwankwo affirmed that the completion of the DDR also facilitates the possible conduct of a debt sustainability analysis by the participating State to evaluate the state’s capacity to service its debt stock over a period of time, using historical and projected debt data, thus enhancing strategic planning activities.

 

The DG of Nigeria’s DMO further affirmed that the conduct of DDR allows the State to bring together their External and Domestic Debt Data; thereby showing a consolidated picture of their debt obligations.

 

“The DDR gives details of debts by category, some include contractual liabilities, Commercial Bank Loans, Government to Government Debts, State Bonds, Staff Salary, Pension Arrears and Contingent liabilities” he said.

 

Nwankwo noted that by the end of year 2010, the DDR exercise will have been completed for 16 States; while by the end of year 2012, the exercise would have been completed by all the 36 States of the Federation.

 

He pointed out that the country would be comfortable to issue $500 million Global Bond before the end of year 2010, “this amount is small compared with what DMO raise on a monthly basis from Domestic Bond” he said.

 

“Many investors are already eager for the Bonds. We will raise the Bond very comfortably. The $500 million is very small compared to what we do every month on the Domestic Market. The essence of floating Global Bond was to establish the Nigeria’s presence in the international Capital Market and to give a benchmark for the Private Sector to access the Market for funding of their various projects,” The DG DMO affirmed.

 

Also, Nwankwo expressed optimism that the Bond would be fully subscribed at the end of it, “to ensure transparency in the issuance of the Global Bond, the Financial/ Legal Advisers to be appointed need to partner with Nigerians to have local knowledge of the Nation’s Market.

 

He noted that though; the competition for the selection of Book Runners which would serve as Joint Issuing House was tough, the name of the shortlisted Companies would be announced by the Ministry for Finance before the end of next week.

 

“The competition for the selection of Book Runners has been tough. The Federal Ministry of Finance will announce the name of the firms shortlisted before the end of next week,” Nwankwo said.

 

The DG DMO further affirmed that the challenges to institutionalising the sub-national debt management initiatives of both the Federal and State Government required huge resources to fund its growth and development; “State needed strong institutions and appropriate skill to access and effectively utilise the borrowed funds” he said.

 

However, he noted that there was need for caution in expanding sub-national borrowing;   until strong and dependable institutions and human capacities have been put in place.

 

“Going forward the DMO is committed to achieving the goal of establishing strong and dependable Public Debt Management institutions in the States before the end of year 2012” he affirmed.

 

While maintaining that the DMO would continue to provide assistance to States to ensure that efficient and effective sub-national debt management principles and practices are incorporated into the overall Public Finance Management framework of the States with the focus on positive contribution to the growth and development on a sustainable basis.