Why Nigeria will continue to borrow – DMO

Director-General of the DMO, Mr. Abraham Nwankwo

The Director-General, Debt Management Office, Mr. Abraham Nwankwo, has said the country will continue to borrow to close its infrastructure gap.

Nwankwo said the nation needed an inflow of $10bn (N1.6tn) annually for the next 10 years to fix its infrastructural deficits.

The DG spoke shortly after a meeting on Monday in Abuja presided over by Vice-President Namadi Sambo, who is the chairman of the board of DMO.

Other members of the board are the Minister of Finance, Attorney-General of the Federation and Minister of Justice, Governor of the Central Bank of Nigeria, Chief Economic Adviser in the Office of the Vice-President, Accountant-General of the Federation and the Director-General, DMO.

Nwankwo, who briefed journalists at the end of the meeting, said that the country’s debt profile of N6.3tn domestic debt and $6.29bn external debt were sustainable.

According to him, there is nothing wrong in borrowing and incurring debts as long as they are judiciously used to finance projects that will be beneficial to the people, while measures are taken to reduce waste.

“Government is trying to ensure that we manage our internal revenue and also take measures to reduce waste,” Nwankwo said, adding that everything should be done to ensure that loans were prudently managed.

He said, “As you know, Nigeria has huge infrastructural deficit and experts have estimated that we require a minimum of $10bn inflow per annual; a conservative estimate, $10bn per annual for us to close the infrastructural deficits over the next 10 years.

“And every economy when you have a gap, your challenge is the best way, the ultimate way to close that gap. So, in our own case, government is finding ways of making sure we maximise internal revenue for the purpose of funding our various needs, including infrastructure; that is why you can see that there has been a lot of improvement over the last two years in the revenue collections from various sources, including the Customs and the Federal Inland Revenue Service.”

He allayed fears that a high debt profile was inimical to the country’s development, arguing that on the contrary, a higher debt would boost the economy.

According to him, in terms of sustainability, the country’s Gross Domestic Product ratio to debt is about 18 per cent, which is favourable for countries in the same group as Nigeria.

He further argued that going by the country’s current GDP figure, the debt outlook looked better.

Nwankwo also said the country had learnt from its past mistakes, adding that it would adhere to laid down rule, and besides, it had also concluded arrangements to help states set up their own debt management offices.

“We are learning from experience. We are conscious that we don’t get back to the former place. This meeting was aimed at ensuring that the country sticks to the fiscal responsibility law,” he said.