By InvestAdvocate

Lagos (INVESTADVOCATE)- Abraham Nwankwo, director general (DG) of Nigeria’s Debt Management Office (DMO) on Tuesday said that about N1.884 trillion expected to be borrowed in the 2016 budget will be dedicated to fund capital projects.

Nwankwo made this disclosure at a one-day workshop by DMO on “Public Debt and the challenge of financing Nigeria’s economic recovery” organised for Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos.

A breakdown of the expected borrowing include N900 billion and N984 billion external and internal borrowing respectively and logic is to rebalance Total Public Debt Stock in favour of less costly external funds.

“The DMO is committed to making sure that we raise money to fund the 2016 budget deficit from appropriate sources and through appropriate mix during the fiscal year to make sure that capital projects are funded,” he said.

According to Nwankwo, Nigeria’s debt level is highly sustainable and noted that the nation still had a lot of idle potential, which the administration is currently working to harness for effective growth of our national economy.

The DMO DG said that while comparative tax revenue to GDP ratio of Nigeria is less than 7.0 percent, its peer group has a ratio of 18 percent and that of industrialised countries is about 27 percent.  He therefore, stressed the need to widen the tax net to generate more revenue for the government.

According to him, Nigeria’s Debt-to-GDP Ratio as at December 31, 2015 is 13 percent compared to 56 percent of peer group; affirming that in this essence our debt is still very sustainable.

“But the critical issue is the ability to service the debt, which is dependent on the Public Revenue – to – GDP ratio,” he added.

To this regard, the DMO DG encouraged all Nigerians to continue to make sure that they pay their taxes fully as at when due because our tax revenue GDP ratio is relatively lower to countries in our peer group.

“As our economy grows, as our GDP grows, as we are collecting enough in taxes from individuals and corporate bodies to be able to fund capital projects, our economy will continue to grow” Nwankwo said.

He further affirmed that debt sustainability and overall economic sustainability can be significantly influence by individuals and corporate bodies paying taxes fully.

Speaking on the economic recession caused mainly by unfavourable structural change in the fall of oil prices globally, he said the Nigerian government is addressing the challenge through diversified, self-sustaining growth in agriculture and agro processing, solid minerals, manufacturing and ICT.

According to him, in the medium to long term, debt sustainability in Nigeria hinges on the overall sustainability of the economic, and the overall economic sustainability hinges on diversifying the economy in a sustainable manner.

“That is what the government is doing in agriculture,   solid minerals, ICT and manufacturing. And to do that we need a strong infrastructure base and that is why government is spending what is borrowing on capital projects,” Nwankwo added.

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Lagos (INVESTADVOCATE)-Nigeria and the United Kingdom (UK) will on Friday launch a report on the success story as regards their public debt management partnership.

InvestAdvocate gathered that the partnership between the Nigerian government and the United Kingdom’s Department for International Development (DFID) in the management of Nigeria’s public debt has yielded positive results, according to a review of partnership.

In October 2000, the DFID assisted Nigeria to establish the Debt Management Office (DMO) which has been a success story 30 years down the line.

Nigeria’s Vice President Namadi Sambo will launch the report on Friday in Abuja Nigeria’s capital.

According to the report, the technical assistance from DFID has enabled Nigeria to professionalise the management of its public debt.

A review of the report has showed that the DFID and Nigeria’s Government partnership on public debt management has made it possible for the DMO to establish Nigeria’s debt figure, and in 2005 to successfully negotiate its external debt down from $35 billion to $5 billion; indicating a 600 percent (600%) reduction in Nigeria’s external debt burden.

The review further showed that other successes have been the extension of debt management systems from the national to sub-national levels of government and a reasonably well-functioning domestic government bond market enabling Nigeria to raise money from capital markets for its national development.

Andrew Pocock, British High Commissioner to Nigeria, speaking on the forthcoming report said partnering with countries like Nigeria to pursue self-financed exits from poverty is a key part of the UK government’s development approach. ‘’Helping Nigeria improve its debt management is an important achievement on the road to macro-economic stability, economic growth and job creation,” Pocock said.

Nigeria’s public debt management until year 2000 was largely ineffective, creating inadequate debt records, difficult means in the verification of debt claims and conflicting figures from the various bodies handling the debt management function.

Also, there was inadequate human capital and poor incentive systems for staff, which gave rise to corruption and thus, affected outputs and performance.

Apart from these, the nation was unable to service its debt and interest payment, leading to a debt crisis that pushed the country’s figure from less than $1 billion in 1970 to about $28.27 billion in 2000.

In 1998-1999, Nigeria entered into an agreement with the UK for ad hoc technical assistance through the DFID with a focus to establish an effective public debt management system.

However, the DFID, as the main partner supported the debt management revival in Nigeria between 1998 and 2013 under three main phases.

The first phase was in 1998 to 2002 which was to establish a system for debt management.

The Second phase-2003 to 2009 was focused on obtaining debt relief so as to promote economic growth and address the rising poverty in Nigeria.

And the third phase- 2009 to 2013 gave priority to national debt policy, and extended   debt management systems from national to sub-nation level of government.

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