The Federal Executive Council (FEC) at its meeting today, February 10, 2021, approved a new Medium-Term Debt Management Strategy for Nigeria, for the period 2020-2023.
DMO in a statement said, the Medium-Term Debt Management Strategy (MTDS) is a policy document that provides a guide to the borrowing activities of a Government in the medium-term, usually four (4) years.
TheFact Nigeria reports that the Q3, 2020 Total Public Debt Stock released by the DMO, revealed that the Total Public Debt Stock stood at N32.223 Trillion or USD84.574 Billion.
The Debt Stock is made up of the Domestic and External Debt Stocks of the Federal Government of Nigeria (FGN), the 36 State Governments and the Federal Capital Territory (FCT).
Meanwhile, the Office said, the strategy was recognized as one of the best practices in public debt management and was recommended by the World Bank (WB) and International Monetary Fund (IMF) to ensure that public debt management was driven by a well-articulated Strategy that was structured to meet a country’s broader macroeconomic and public debt management objectives.
According the statement, the MTDS, 2020-2023 has been prepared by the Debt Management Office (DMO), in collaboration with relevant stakeholders (Federal Ministry of Finance, Budget and National Planning, Central Bank of Nigeria, Budget Office of the Federation, National Bureau of Statistics and the Office of the Accountant-General of the Federation).
The statement said, Nigeria has had two (2) Medium Term Debt Management Strategies (2012-2015 and 2016-2019), prior to the current Strategy. The new Strategy had to be re-worked to reflect the global and local economic impact of the COVID-19 Pandemic and incorporates data from the revised 2020 Appropriation Act and the Medium-Term Expenditure Framework 2021-2023. Thus, the new MTDS adequately reflects the current economic realities and the projected trends.
It said, the preparation of the MTDS usually involves the consideration of alternative funding strategies available to Government, as it seeks to meet its financing needs, taking into consideration the cost of borrowing and the associated risks, while ensuring debt sustainability in the medium to long-term.
DMO said, based on the current Public Debt Stock, Government’s borrowing needs in the medium-term (as stated in the 2021 Appropriation Act, MTEF, 2021- 2023), as well as future global trends, Nigeria’s 2020-2023 MTDS can be summarized as follows: “Borrowing will be from domestic and external sources but a larger proportion of new borrowing will be from domestic sources using long-term instruments while for External Borrowing, concessional funding from multilateral and bilateral sources will be prioritised”.
It said, the implementation of the Medium-Term Debt Management Strategies over the years, has helped in managing the structure of the growing public debt, and ensured debt sustainability, as well as effectiveness in public debt management. With the approval of the Federal Executive Council of the MTDS, 2020-2023, the Strategy will be implemented to support economic development while ensuring that the Public Debt is sustainable.