By Ademola Alawiye

Friday, 18 Feb 2011

The Debt Management Office said on Thursday that it was currently designing for implementation, appropriate vehicles for attracting funds from Nigerians in the Diaspora.

According to the Director-General, DMO, Mr. Abraham Nwankwo, such funds around which an instrument will be created will be used to finance projects such as housing, power generation and distribution, agriculture, health care, education and specialised training institutions, among others.

Speaking at a breakfast meeting with journalists on Thursday, he noted that the move would also enable Nigerians abroad to participate in the growth and development of the country.

He said, “The idea will involve investors taking control of the process. It will be free of government’s interference. Government will only provide the necessary environment, including the legal framework that will guarantee the investment.”

He pointed out that the debt office was not lending to government, but pooling resources together to solve some of the nation’s critical infrastructure deficiencies.

He said, “We are encouraging them to use the opportunity to invest for themselves and by themselves. It will encourage the private sector to seek development funds. This will also further help to make government’s debt sustainable in the medium to long-term.”

Speaking further, Nwankwo said, “Managing debt across the world is a very delicate matter, and a double-edged sword because when the bond proceeds is well utilised, the people gain, and if otherwise, the people lose and still bear the burden of servicing and repaying the debt.”

He explained that governments and corporations borrowed because they could not depend on current revenues, otherwise they could be subjected to very slow growth.

The current administration, he added, was aware of the need to ensure that the nation’s debt remained sustainable, as the N4.5tn domestic and $4.578bn external debt translated into a total debt-to-Gross Domestic Product ratio of 17 per cent.

He said, “This is within very safe limits compared to the 40 per cent threshold for countries with its development level. Government does not intend to exceed 25 per cent by the end of 2014.”

He stressed that how much debt a nation owed was not as important as how effectively the fund was utilised.

Nwankwo said, “Government was not crowding out the private sector from the bond market but currently preoccupied with creating the enabling environment for the private sector to borrow to fund infrastructure and power projects, among others.”

 

Source: Punch