•Managers grappling with elevated debt levels, rising borrowing costs, others, says WAIFEM DG
Chigozie Amadi
Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, yesterday called for routine disclosure of debt portfolios and borrowing activities.
He said such publication was crucial for transparency as well as building trust with investors, creditors, and the public – effectively creating a virtuous cycle that reduces borrowing costs and promoting efficient debt management.
Speaking at the opening of the regional training on Annual Borrowing Plan (ABP) development which was jointly organised by the World Bank, International Monetary Fund (IMF) and WAIFEM in Abuja, Cardoso also called for strengthening of national capacities for debt management, adding that this was vital for meeting the government’s funding needs in both the present and future in a cost-effective and risk-conscious manner.
Represented by CBN acting Director, Ms. Ladi Bala-Keffi, the CBN governor stressed that publishing the country’s Debt Management Strategy (DMS) was particularly essential as it demonstrates the government’s unwavering commitment fiscal strategy, promoting transparency and accountability in debt management practices.
He said amid today’s interconnected world, effective debt management remained not just a technical exercise but a strategic necessity that enables the government to finance critical investments in infrastructure, education, healthcare, and other essential services without jeopardising the well-being of future generations.
Cardoso explained that the Annual Borrowing Plan (ABP) often translates strategic objectives into concrete actions for raising funds and managing the government’s debt portfolio based on budget analysis and cash flow projections.
He said developing and implementing a robust ABP often communicates the government’s borrowing intentions to domestic and international markets enhancing predictability and fostering investor confidence which in turn, attracts a broader pool of investors and can lead to more favourable borrowing terms.
Additionally, he noted that the ABP facilitates proactive risk management by identifying potential vulnerabilities, such as refinancing risks or exposure to specific currencies or interest rate movements, allowing debt managers to take pre-emptive measures to mitigate these risks.
Cardoso, however, pointed out that the development of the ABP required close collaboration among various stakeholders, including the Ministry of Finance, CBN and debt management agencies, adding that these collaborative efforts would strengthen coordination, enhances coherent decision-making, and avoids ad hoc borrowing operations, ensuring that borrowing activities align with broader macroeconomic objectives.
Among other things, he said ABP promotes responsible debt management practices by aligning borrowing activities with the Medium-Term Debt Strategy (MTDS) and fiscal policies which contributes to long-term debt sustainability, and reduces the likelihood of debt distress and its adverse economic consequences.
In his remarks, Director-General, WAIFEM, Dr. Baba Musa, said sound public debt management strategies and well-articulated borrowing plans had become critical in recent times.
He said public debt had recently surged worldwide due to various factors, notably the COVID-19 pandemic, geo-political tensions, and other economic shocks, which had mirrored in the African subregion – where debt managers grapple with unique challenges, including volatile commodity prices, elevated debt levels, limited fiscal space, fluctuating exchange rates, and rising borrowing costs.
Represented by WAIFEM Director, Fiscal Policy, Debt Management and Regional Integration Department, Mr. Yakubu Aliyu, Musa said these challenges posed significant threats to debt sustainability, macroeconomic stability, growth prospects, and the well-being of the citizens.
He said while member-countries diligently formulate and update Medium-Term Debt Strategies (MTDS), the practical implementation often presented considerable challenges.
Hence, he said the training on ABP was designed to address implementation constraints by providing a structured framework for operationalising the MTDS annually.
According to him, this approach facilitates a more granular and actionable approach to debt management, ensuring the translation of strategic objectives into concrete borrowing activities and targets for the fiscal year.
Musa stressed that aligning with the government’s budgetary and fiscal policy objectives, the plan determines the sources of financing, instrument types, and maturities while remaining mindful of prevailing market conditions.
He added that the issuance plan, in turn, operationalises the ABP, detailing the timing and specifications of each debt issuance, which ensures a consistent and predictable supply of funds to meet the government’s financial obligations.
He pointed out that continuous monitoring and evaluation of the process guarantee adaptability to evolving economic landscapes and policy priorities, ultimately promoting efficient public debt management.
