The Debt Management Office (DMO) has so far raised the approved domestic borrowing of N1.18 trillion to fund the economy.
Its Director General, Dr Abraham Nwankwo, disclosed this yesterday while addressing members of the Senate Committee on Local and Foreign Debts.
According to him, by raising the entire domestic component of the budget, Nigeria has successfully developed a strong domestic market.
He added that the remaining N635 billion was to be borrowed from external sources including $1 billion from the African Development Bank (AfDB), which had released $600 million.
The Ministry of Finance, he said, was working to secure the balance, but noted that the current economic situation was making the realisation a huge challenge.
“Despite this, there’s some good news because the government can fall back on domestic borrowing. DMO is working to see that the $1 billion Eurobond is mobilised by the second quarter of 2017”, he said.
The DMO boss also revealed that the Federal Government was servicing its debt when due, adding that “of the N1.161 trillion to be serviced in 2016, the Federal Government has serviced N1.09 trillion”.
Continuing, he said: “Nigeria is in a very strong position to service its debts because of our debt sustainability analysis which ensures that we make sure that we do not go near the threshold of borrowing and to avoid unsustainable debts. So we are operating miles away from the threshold. We will build sustainable economy in the next three to five years”, he noted.
On the controversial $29.9 billion loan, the DMO boss explained that the $30 billion loan would be borrowed over a three-year period and not at once.
“Drawdown of the loan will be done based on the progress of the work, and it is essentially for infrastructure because we don’t have revenue at hand to provide infrastructure.
“These infrastructure will help reduce poverty. There must be no leakages. That should be our focus and there must be accountability. Investment of $30 billion should be in infrastructure that can repay itself.”
Internally, Nwankwo added that the DMO has only received overhead allocations up to August this year because of recessio.” He explained that, out of the DMO’s capital expenditure (Capex) of N87.3 million for 2016, only N33.79 million has been released.
“We are doing what we can with what we have to support the economy. We have advertised for tender to execute some capital items, hoping that the balance will be released”, he said.
In his remarks, Shehu Sani, the Chairman Senate Committee on Local and Foreign Debts, urged the DMO to rigorously pursue robust and effective debt management measures.
“The committee is suggesting a holistic review of the Debt Management Office Act to address current challenges of debt management in the country. For example, an accounting officer who borrows money and misapplies such fund should be held accountable. There should be consequences for such misdemeanours.”
On the issue of loan terms and conditions, the senate committee he said “will henceforth pay attention to the agreement on terms and conditions for loans obtained by government to forestall a situation where Nigerians are unnecessarily shortchanged.”