Government commits to private sector borrowing

Government commits to private sector borrowing
Hauwa Noroh Ali, Abuja

The Director General of Nigeria’s Debt Management Office (DMO), Dr. Abraham Nwankwo has said that the Nigerian Government will provide various types of support both domestic and external to encourage Private Sector borrowing for development of the real sector.

Debt reduction

Speaking at the National Debt Sustainability Analysis forum in Abuja Nwankwo said that government resources alone is not enough to exploit Nigeria’s Natural resources to produce the type of transformation that Nigeria needs in the next five to ten years.

He said that that only a combination of government and private sector intervention can help in a full scale transformation of Nigeria and also to help the government reduce its borrowing.

The Director General noted that Nigeria, under the debt sustainability framework, can borrow up to 40 percent of its GDP but Nigeria has set conservative limit of 25 percent to curb borrowing.

 “As of the last quarter of 2010 Nigeria’s Debt Portfolio was 4.5 trillion Naira for domestic loans and 4.6 billion dollars for external loans and a combination of all these shows a debt ratio less than 18 percent, and our self imposed deadline is 25 percent until 2015,” Nwankwo said.

Ensuring transparency

The Director Debt Management Department of the West African Institute for Financial and Economic Management (WAIFEM), Mr Baba Musa, speaking at the forum said that Fiscal transparency was an essential component in governance, noting that the more information was given to the public, the more the people have confidence in the government’s fiscal performance.

He said: “the institutionalisation of a debt management office has resulted to effective management of borrowing, unlike what was obtainable in 80’s when there was an uncoordinated debt management.”

The forum

The two week forum on National Debt Sustainability Analysis is a fiscal function that fits the budget exercise of what is normal and expected from any country to disseminate the result of the sustainability to the general public and also guide lenders, borrowers and policy makers through the provision of a greater insight into the thinking of government towards borrowing.

Williams