From Fred Itua, Abuja
The Debt Management Office (DMO), yesterday, revealed that it would no longer be business as usual for state governments, saying that those who engaged in reckless domestic and foreign borrowing may not find it easy going forward.
Speaking yesterday in Abuja when she received the Governor of Edo State, Mr. Godwin Obaseki, the Director General of DMO, Patience Oniha, noted that given the present economic challenges, it was time for the states to become more creative and strategic in the management of their finances, warning that the nation’s revenue was still under severe pressure.
According to her, it became very imperative for the government to take such a decision because there was no longer huge allocation to states from the Federation Accounts Allocation Committee (FAAC) from where borrowed funds could be deducted, adding that continuous exposure to new lines of borrowings may no longer be sustainable.
In the meantime, Governor Obaseki who was on a congratulatory visit to the new DMO boss on her recent appointment, said that Nigeria as a country was really facing hard times, stressing that in Edo State, government was practicing what it preaches about good governance and accountability.
Obaseki who noted that the present government was working hard to build and strengthen the institutions, said that without that, the government will not be able to drive the economy, assuring that the state cannot borrow at current interest rate. Obaseki said, “in the case of Edo, we are trying to practice what we preach – good governance. Make sure the state is grounded in good governance and accountable to the people. We are blessed and we are the heartbeat of the beat. You can imagine if you remove the heart.
“Some time ago, we borrowed from the capital market. We would sit and look through our fiscal plans and we would make a determination at that point whether we would still come back to the market. But from the look of things, except the interest rate comes down, we are not likely to borrow. We would not be able to come to the bond market, except the interest rate comes down because we may not be able to sustain the debt service.”
DMO boss on her part, said, “previously, we could rely on funds from FAAC and in addition to that, we could borrow both at the federal and state levels because there wasn’t any challenge. But I think the times have changed.
Revenues are under severe pressures, we are still dependent on oil revenues, non-oil revenues are picking up but that is still a journey.
“So it means now, and in future, we need to do things so much differently, we must be more strategic in the management of public finance so the language I always use in my previous work where I was at the Efficiency Unit is that its no longer business as usual.
“We can’t collect money from FAAC, borrow, continue and wait until the next month. So at various levels, we need to be more strategic and more creative in the things we do.
So while we at the federal level have initiated several measures to increase non-oil revenue, control cost, I’m aware that states like Edo State have embarked on a number of initiatives; that is commendable.”
According to her, the law recognises the states for being responsible for fiscal laws relating to the states but “we decided to partner with them in the belief that Nigeria is one project, hence we should not be looking at the centre. We should be looking at the various tiers of government. So what we did in that regard was to work with the various tiers of the states to have enabling laws, create their own debt managements and then work with them through training and other activities to create their own domestic debt data.
“You know at the centre we have the figures of the external. I’m pleased to say that aspects of the DMO work have been successful. But even more so, I check to find out if Edo State has been compliant. I’m glad to say that on all those three counts, the state has been compliant including sending us their debt data. We congratulate them for cooperating with us in that regard.
“At the DMO, we have done a lot with the states in terms of assisting in developing their debt data, passing debt laws leading to the establishment of debt bureaux and so on. As we speak, we have a good understanding of the debt portfolios at the sub-national and I’m happy that Edo State is one of the states that is compliant in its debt data reporting.”