By Everest Amaefule, Abuja
Published: Tuesday, 17 Jul 2007

Ghanem spoke at the National Debt Strategy and New Financing Analysis Workshop organised by the Debt Management Office in Abuja on Monday.

At the event, the Director-General and Chief Executive Officer, DMO, Dr. Abraham Nwankwo, unfolded plans to integrate cash and debt management operations in order to reduce the cost of funding to government.

The World Bank chief said although Nigeria’s debt ratio had become very comfortable, the risk of over borrowing and relapsing into unsustainable debt was still very high.

The immediate past DG of DMO, Dr. Mansur Muhtar, had in May disclosed that the nation had, between 1999 and April 2007, taken fresh loans totalling $5.6bn.

Of the current debts, $2.9bn was borrowed from multilateral resources; $2.5bn came from China, while $200m came from unidentified sources.

Ghanem said because of the high risk, which the nation faces with over borrowing, the work of DMO after the debt exit was now more central in ensuring that Nigeria did not get back into unsustainable debt position.

Nwankwo, on the other hand, said nations that have experienced a relapse after debt relief share a number of characteristics.

He listed them to include considering the debt profile of only the central government when calculating their debt ratio; paying less attention to fundamental issues like resort to ways and means, and the failure to acknowledge the important linkages between domestic and external debts and between sub-national debts and those by the private sector.

He said, “One of the major challenges for debt managers in a post-relief period, therefore, is to integrate external, domestic and sub-national debt management in such a way that debt could, in addition to its traditional objective of financing fiscal gaps, be used for funding development projects at national and sub-national levels.

“With the retirement of Paris and London Club debts, it is important that new external borrowings are properly managed within an appropriate debt management framework.”

The DMO boss said the new agenda would focus on mobilising additional financing such as grants and concessional loans targeted at accelerating growth and poverty reduction and meeting other Millennium Development Goals related targets.

According to him, it will also focus on accessing the international capital market on terms favourable to Nigeria for resource mobilisation towards the financing of key infrastructure projects and creatively using FGN guarantees to finance joint venture schemes and lending to sub-national levels.