Governor of the Central Bank of Nigeria, Olayemi Cardoso has called for the entrenchment of an effective debt management to meet revenue needs of the country for financing of critical investments in infrastructure, education, healthcare, and other essential services without jeopardising the well-being of future generations.
To achieve debt management objectives that include securing necessary financing at the lowest possible cost while prudently managing risk, the CBN governor added that developing the domestic debt market is also key in certain instances. “Strengthening national capacities for debt management is crucial for meeting the government’s funding needs both now and in the future in a cost-effective and risk-conscious manner. Our countries must prioritise building a balanced and resilient debt portfolio,” Cardoso said yesterday at the regional training on annual borrowing plan development jointly organised by the World Bank, the International Monetary Fund and West African Institute for Financial and Economic Management (WAIFEM).
He said the development of a working Debt Management Strategy (DMS) would demonstrate the government’s unwavering commitment to its fiscal strategy, promoting transparency and accountability in debt management practices.
“This mitigates investor uncertainty and facilitates constructive dialogue with creditors, investors, and other key stakeholders, including credit rating agencies, regarding the optimal financing strategy,” Cardoso, who was represented by the director, monetary policy department at the CBN, Ladi Bala-Keffi said in Abuja.
The CBN governor said developing and implementing a robust annual borrowing plan (ABP) offers numerous benefits for Nigeria and Africa.
He said 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 preemptive measures to mitigate these risks.
Also, director general of WAIFEM Baba Yusuf Musa said the subregion is faced by volatile commodity prices, elevated debt levels, limited fiscal space, fluctuating exchange rates, and rising borrowing costs which all pose significant threats to debt sustainability, macroeconomic stability, growth prospects, and, ultimately, the well-being of the citizens.
“In this context, sound public debt management strategies and well-articulated borrowing plans are more critical than ever,” he stated, adding that continuous monitoring and evaluation of the process of effective annual borrowing plan would guarantee adaptability to evolving economic landscapes and policy priorities, ultimately promoting efficient public debt management.
The training which draws membership from across the region is designed to provide a holistic understanding of the role of ABP in public debt management. It examines the foundational requirements for effective ABP Development, particularly the need for robust data, institutional collaboration, and sound analytical frameworks.
Participants are expected to revisit the core concepts of medium-term debt strategies, highlighting their critical role in shaping borrowing targets and risk parameters. The training is also designed to introduce the ABP analytical tool with practical, real-world data exercises.