THE Debt Management Office (DMO) yesterday explained how proceeds of the nation's public debt in the last three decades have been spent. It also explained strategies adopted by it to keep the debt under sustainable level.
The country's public debt as at the end of December 2010 was $4.7 billion for the foreign component and N4.5 trillion for the domestic component, comprising Federal Government's bonds, treasury bills and development bonds.
The agency' Director-General, Dr. Abraham Nwankwo, said substantial proceeds, particularly from the domestic component of the debt stock had been deployed to the following areas under government's budgetary plans: Funding of Federal Governments' budget deficit; refinancing of matured debt obligations; infrastructural projects; special projects i.e. local contractors' debt, arrears of pension funds, among others.
He spoke in Kaduna at an interactive session with finance editors meant to
broaden their understanding of debt management issues with particular reference to the country.
He listed some of the projects funded with proceeds of the sums raised to include the Federal Government's commercial agriculture credit
scheme managed by the Central Bank of Nigeria and the Federal Ministry of
Agriculture.
Others, according to Nwankwo include: "The Nigerian cotton, textile and garment scheme, managed by the Federal Ministry of Agric, Industry and the Bank of Industry; the revitalisation of railway transport; purchase of new locomotives, managed by the Federal Ministry of Transport; the development of new districts infrastructure in the Federal Capital Territory (FCT) managed by the FCT administration and the development of Abuja key access road (Airport and Kubwa)."
There have been widespread concerns expressed by Nigerians on the country's growing public debt stock, with many saying they don't know where the proceeds have been applied.
But Nwankwo has maintained that the debt has been growing proportionately to the country's growth and was at 16 per cent of GDP far below the 40 per cent allowed Low Income Countries (LCI) in which category Nigeria belongs.
In a paper at the workshop entitled "Evolution of the Debt management Office in Nigeria," by an assistant director of the agency in charge of policy, strategy and risk management, Mr. Ibrahim Natgwandu, he said as part of the agency's plan to keep the debt stock under sustainable level, the agency was now "Raising finance in the domestic market to cover the government's borrowing needs at the least possible cost and within a prudent degree of risk; funding the nation's debt in a non-inflationary manner, without recourse to monetary financing; promoting the development of the domestic capital market; and ensuring proper coordination between debt management and monetary policy." Also, in another paper by Mrs. Elizabeth Kwagbhbuah of the DMO, on "Requirements for external and domestic borrowing in Nigeria," she said very stringent conditions had now been set for borrowings internationally and locally for all tiers of government and their agencies, with a view to curtailing the recklessness of debt contracting at all levels.
Source: How we spent proceeds from bonds, others, by DMO (http://www.ngrguardiannews.com/index.php?option=com_content&view=article&id=36810:how-we-spent-proceeds-from-bonds-others-by-dmo&catid=1:national&Itemid=559)