The Debt Management Office (DMO) on Thursday described continued borrowings by Nigeria’s national and subnational governments and other countries to finance budget deficits and critical infrastructure as not undesirable for sustainable development.
The Director General of the Office, Patience Oniha, who made this remark on the sidelines of an awareness programme on security issuance organised by the Office in Abuja, pointed out that most governments were borrowing to finance critical infrastructure.
She explained that if well utilized, the multiplier effects of such borrowings as they relate to quality infrastructure on a country’s economy cannot be quantified.
Oniha recalled that successive Nigerian governments had been borrowing to fund budget deficits, as the implementation of the yearly budgets would be adversely affected if funds are not adequate to finance the budgets.
The DG said: “The issue of debt has become topical in Nigeria that sometimes it almost looks as if borrowing is an offence or a crime.
“The first thing we must understand is that countries across the world borrow, be it poor countries, advanced countries, developed countries, emerging markets. They all borrow.
“In Nigeria, we borrow to finance budget deficits. Sometimes we borrow to finance specific projects and services like railways and airports. Financing infrastructure is an economy itself.
“It creates jobs across all sectors. We also borrow to finance maturing loan obligations like the Federal Government of Nigeria bonds and Nigeria Treasury Bills”, Oniha added.
Expatiating on the statutory laws regulating borrowings by governments at various levels and prevent abuse of the process, the Director General cited Nigeria’s Fiscal Responsibility Act and the DMO Act as veritable tools to checkmate abuses in borrowing by the tiers of government in the country.
She said: The Fiscal Responsibility Act states that borrowing should be for capital purposes and for human capital development. The DMO Act is also clear, especially on external borrowings.”
