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DMO to ensure judicious use of $1bn Eurobond

By on August 25, 2013

The Director-General, the Debt Management Office, Dr. Abraham Nwankwo, has said the power projects for which the country recently secured a $1bn Eurobond will be judiciously monitored.

The $1bn Eurobond offering meant to finance power projects was four times oversubscribed due to high investor demand.

Nwankwo also said the states were free to borrow from the international capital markets provided they met the requirements.

He spoke on Thursday in Calabar, Cross River State, at a one-day workshop for the South-South, South-East and South-West geopolitical zones on effective sub-national debt management for top policy makers.

According to Nwankwo, the projects to be executed with the $1bn Eurobond will be monitored by the DMO, while there will be a deliberate attempt to report findings periodically.

“All borrowed funds must be well utilised. Even the $1bn Eurobond, the DMO will ensure that the projects in the power sector are closely monitored. We are not only going to ensure close monitoring, we will also make sure that the findings are reported from time to time,” he said.

Nwankwo stated that the country was currently operating a vibrant fiscal federalism with high level of fiscal autonomy for the states of the federation.

“However, we need to ensure effective coordination and sufficient congruence, vertically between the federal and state governments, and horizontally among the states, in order to maximise the synergy for growth, development and poverty reduction,” he said.

On the requirements to borrow funds, Nwankwo said the states must get an approval and guarantee from the Federal Ministry of Finance and also fulfil the various conditions of the Securities and Exchange Commission.

“States can borrow so far they get an approval from the Federal Government. There are various levels of control and supervision of external and internal borrowings. What applies to listed companies that borrow from the capital market also applies to state governments,” he said.

Nwankwo also said the states must meet the requirement of paying the loan at the agreed time.

He added that the objective of the workshop was to ensure that the achievements recorded in sub-regional debt management were internalised, consolidated, sustained and improved upon.

Declaring the workshop open, Governor Liyel Imoke, said as decision makers and managers of finances, the participants drawn from all the states in the southern part of the country should come up with sustainable strategies that would enhance debt sustainability and management.

Imoke, who was represented by his deputy, Mr. Efiok Cobham, said as a key instrument of sound public finance management, the DMO had continued to play a pivotal role in debt matters, not only to avoid the nation relapsing into debt, but also to regulate debt matters.