Emma Ujah, Abuja Bureau Chief
The Debt Management Office (DMO) has advised State Governments to strictly adhere to the provisions of the Fiscal Responsibility Act regarding borrowing.
The Director-General of the Office, Ms. Patience Oniha, gave the charge at the workshop on borrowing for officials of state governments, in Abuja, Tuesday.
In addition to adherence to the relevant laws, she also urged the participants to ensure Responsible borrowing by their various sub-nationals.
According to the D-G, “We have been doing capacity building for what we call the sub-national governments, meaning the 36 states of the Federation and the Federal Capital Territory to put them through the things that we do, debt recording, debt sustainability analysis, medium-term debt management strategy, how to record debt, all of that we put them through.
“This is very important because we the states to be familiar with the guidelines for borrowing, to adhere to the provisions of the Fiscal Responsibility Act which have set the conditions for borrowing.
“This part of it -which is the workshop on borrowing guidelines. It is a targeted training. So it’s not about what’s your debt stock. It’s a case of what are the requirements, what is the process for borrowing.
“Our experience several years back was, each time a state wanted to borrow, because one way or the other, based on the laws, the Fiscal Responsibility Act, the DMO Act, and the Investment and Securities Act, it has to pass through the Honorable Minister of Finance and through the Debt Management Office. So we saw the process was taking time, because there wasn’t clarity or understanding. That was when we initiated this workshop.
“Maybe five years ago, we had the first one in Lagos. But this time, we decided to split it to accommodate more people.
“As you saw today, each state has about five, six, some eight people, so that they can all understand the borrowing guidelines which basically explain the major laws that govern borrowing.
“There’s the Constitution of the Federal Republic of Nigeria, there’s the Fiscal Responsibility Act, and then there’s the Debt Management Office Act, which has provisions for borrowing. What that means is that there’s no flexibility. If it’s in the law, you really have to comply.
“So how do we make the process work? How do we make the sub-national governments to understand the process of borrowing, so that they can raise the funds that they need for development?
“This is very critical because if they haven’t understood the process, they can’t comply and they can’t raise the funds. So any lender, whether they’re borrowing from, even if it’s from a development finance institution like the World Bank, it still has to go through that process.
“The idea is to equip them with all the skills, the knowledge they need, so that each time they want to borrow, they are ready and the process is smooth.
“Ultimately, the expectation is that the funds that they raise will be used for development in the state.”
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