DMO, World Bank present states’ debt management guidelines

The Debt Management Office (DMO) and the World Bank have presented Guidelines for the Legal Framework for the state government debt management operations in order to make their debt more sustainable.

Both the DMO and the World Bank disclosed this at an engagement where the duo presented the guidelines, virtually, as part of the implementation of the State’s Fiscal Transparency, Accountability and Sustainability (SFTAS) Program.

The Programme is a collaboration between the World Bank, the Federal Government of Nigeria and the thirty-six (36) State Governments towards the achievement of the Disbursement-Linked Indicator (DLI)-7 on, strengthened public Debt management and fiscal responsibility framework.

The Director-General of the DMO, Ms Patience Oniha, stated that “This DLI requires that States should have robust State-level legislation which incorporates amongst others; responsibilities for contracting State debt, for recording and reporting State debt, as well as, fiscal and debt rules and/or limits for States.

“Legislations and institutional arrangements are widely acknowledged as invaluable tools for ensuring that systems and processes in Government work on an ongoing basis. “Therefore, DLI-7 is most appropriate and relevant for debt management operation.

By way of information, the DMO had several years ago entered into a partnership with State Governments and Federal Capital Territory on several debt management initiatives including capacity building, debt data capturing and legislations.

The SFTAS Program has up-scaled these initiatives, improved the level of commitment, and, brought a sense of urgency to improve public debt management at the Sub-national level. Overall, the outcome is a strong positive.

“The DMO had several years ago entered into a partnership with state governments and Federal Capital Territory on some debt management initiatives including capacity building, debt data capturing and legislations.

The States Fiscal Transparency, Accountability and Sustainability (SFTAS) Program has up-scaled these initiatives, improved the level of commitment, and, brought a sense of urgency to improve public debt management at the Sub-national level”.

Oniha explained that the fresh engagement would give state governments a clear understanding of the guidelines and requirements of State Debt Legislation and the Institutional Frameworks required for efficient debt management operations, to ensure “that borrowing is prudent and that debt is sustainable.”

Debt management laws at the sub-national level, she said would guide officials at that level on the processes and limits of borrowing.

The DMO boss said, “We have a DMO Act, a set of laws which governs our operations. We want them to have those laws. DMO cannot just say we want to borrow.

“There are practices that have to be complied with. And that law is the law setting up the DMO as an institution. If they have those laws, it means they will have institutions, functions of the institutions; borrowing relationships, even though those are governed largely by fiscal responsibility Act”.