The Debt Management Office (DMO) says borrowings by countries to finance budget deficits and critical infrastructure is not necessarily bad.
Patience Oniha, DMO director-general, said on Thursday in Lagos. She spoke on the sideline of an awareness programme on security issuance organized by her office.
Ms Oniha said government borrowings were done by all countries worldwide, mostly to finance critical infrastructure.
According to her, the multiplier effects of quality infrastructure on a country’s economy cannot be quantified.
She added that successive Nigerian governments have had to resort to borrowing to fund budget deficits, adding that annual budgets would be affected if funds were not raised to support them.
“The issue of debt has become topical in Nigeria that sometimes it almost looks as if borrowing is an offence or a crime,” said Ms Oniha. “The first thing we must understand is that countries across the world borrow, be it poor countries, advanced countries, developed countries, emerging markets. They all borrow.”
The director-general said that the advent of COVID-19 had also made borrowing imperative for some countries.
“In Nigeria, we borrow to finance budget deficits. Sometimes we borrow to finance specific projects and services like railways and airports. Financing infrastructure is an economy itself. It creates jobs across all sectors,” said the director-general. “We also borrow to finance maturing loan obligations like the Federal Government of Nigeria bonds and Nigeria Treasury Bills.”
According to her, there are statutory laws that regulate borrowings by governments at various levels and prevent abuse of the process.
“The Fiscal Responsibility Act states that borrowing should be for capital purposes and for human capital development. The DMO Act is also clear, especially on external borrowings,” she added.
(NAN)
