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CBN, WAIFEM urge states on institutional competence to manage debt, pay back loans

The Central Bank of Nigeria (CBN)  Governor, Godwin Emefiele said it is important for states to have transparency, institutional capability and strength to follow through…

The Central Bank of Nigeria (CBN)  Governor, Godwin Emefiele said it is important for states to have transparency, institutional capability and strength to follow through with the process of debt securing and management to pay back loans.

Emefiele spoke during a training by the West African Institute for financial and Economic Management (WEIFEM) in collaboration with the World Bank and the International Monetary Fund (IMF) on sub nationals debt management performance assessment, yesterday in Abuja.

Represented by the Director, Monetary Policy Department, Dr. Mahmud Hassan, the Governor said the Government Debt Management Performance Assessment (DeMPA) programme is important for state personnel to be well acquainted, thus, the training is designed to provide in-depth knowledge in the methodology and operational modalities of the tool, rationale, scope, coverage, and application of the DeMPA tool and preparation of reform plans.

He pointed out that legal frameworks for state borrowing are incomplete, impeding the efficacy and efficiency of public debt management.

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CBN, WAIFEM urge states on institutional competence to manage debt, pay back loans

“State government legislations in Nigeria do not adequately define the purposes of subnational borrowing or regulate the issuance of sovereign guarantees, posing substantial fiscal risks. In general, state institutions lack sufficient capacity to execute their statutory obligations, and the increasing size and risk exposure of state debt portfolios underscores the urgent need for sound debt management practices and increased capacity among subnational government agencies.”

In his opening remarks, the Director General, West African Institute for Financial and Economic Management (WAIFEM), Dr. Baba Yusuf Musa said  since 2007, the World Bank introduced The Government Debt Management Performance Assessment (DeMPA) tool for effective debt management performance.

Speaking on the country’s debt burden, Musa said Nigeria needs to mobilise more revenue to stop the current level of borrowings by federal and state governments.

He said the country’s debt should not be a source of worry as it is still within recommended limits.

While noting that both national and sub-national debt should have an organisational structure that is conducive for debt portfolio analysis, he called for the development of legal framework that includes “Clear debt management objectives, authorisation to borrow and undertake other debt management activities and to issue loan guarantees, requirement for strategy development, and accountability, reporting and should be manned by skilled staff which adequate capacity to undertake risk analysis.”

 

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