The Governor of the Central Bank of Nigeria, Mr Olayemi Cardoso has called on countries to prioritize building a balanced and resilient debt portfolio.
The Governor said this during the opening ceremony of the regional training on annual borrowing plan development jointly organized by the World Bank, International Monetary Fund and West African Institute for Financial and Economic Management, held in Abuja.
Cardoso said the Nigerian government has devised a plan- Debt Management Strategy (DMS) with the objectives of securing necessary financing at it’s lowest cost.
The apex bank boss said the DMS would help in prudently managing risks and developing the domestic debt market.
“This demonstrates the government’s unwavering commitment to its fiscal strategy, promoting transparency and accountability in debt management practices. The Debt Management Strategy applies these objectives by outlining the government’s preferences regarding the trade-offs between cost and risk associated with its chosen strategy,” Cardoso said.
The CBN boss explained that the Debt Management Strategy is implemented annually through an Annual Borrowing Plan.
He said, “Developing and implementing a robust Annual Borrowing Plan offers numerous benefits. A well-organized plan communicates the government’s borrowing intentions to domestic and international markets, enhancing predictability and fostering investors confidence, hence, attracting a broader pool of investors and can lead to more favourable borrowing terms.”
According to him, the development of the Annual Borrowing Plan requires close collaboration among various stakeholders including the Ministry of Finance, the Central Bank and debt management agencies.
He added, “This collaborative process strengthens coherent decision-making and avoids ad hoc borrowing operations, ensuring that borrowing activities align with broader macro-economic objectives.
“This development also promotes responsible debt management practices by aligning activities with the Medium-Term Debt Strategy (MTDS) and fiscal policies, this in turn reduces the likelihood of debt distress and its adverse economic consequences.”
Cardoso noted that formulating robust Debt Management Strategies and Annual Borrowing Plans cannot be done in isolation.
He said it requires a comprehensive approach involving a well-coordinated institutional framework for public debt management and a stable macroeconomic environment.
Countries Must Prioritize Building Balanced, Resilient Debt Portfolio, Says Cardoso is first published on The Whistler Newspaper