DMO to develop new debt products

The Debt Management Office (DMO) is to develop other debt products within the next four years.

Director General of DMO, Abraham Nwankwo, who said this while speaking with reporters in his office on Monday said the new products and more sources of financing and instruments such as inflation-linked bond and domestic sukuk.

For the international capital market, the new instruments will include diaspora bond, Nwankwo clarified but added that everything will be subject to market conditions.

“In addition, the DMO plans to introduce new products with a view to further diversifying the investor- base financial inclusion and national savings culture for increased gross capital formation, create more benchmarks and deepen the domestic and external markets for government securities.

Nwankwo said his agency has adopted a mixture of external and domestic borrowing as a means of funding government’s projects in the next four years as captured in the new Nigeria’s Debt Management Strategy (2016-2019) unveiled yesterday in Abuja.

The new debt strategy was endorsed last week at the Federal Executive Council (FEC) meeting and it replaced the previous debt strategy plan (2012-2015) which expired last December.

“The main guideline and targets of the new debt management strategy includes, debt composition targeting an optimal debt of 60:40 for domestic and external debt, respectively, as against the 84:16 as at end 2015, by progressively increasing the percentage share of external financing taking in to account the need to moderate foreign exchange risk in the short to medium term,” he said.

Nwankwo said going by the economy diversification agenda of President Muhammadu Buhari’s administration with strong preference for developing agriculture, mining and other non- oil sector for export, huge funds would be required to be invested in key infrastructures such roads, power and in other areas.

He said such funds cannot be borrowed locally due their short- term tenure of maturity.

“The new policy focuses on the utilisation of all the borrowed amounts to fund budget deficit and the amounts would be specifically allocated to fund identified infrastructure projects.  Efforts are also being made to improve governance and efficiency in fiscal operations of the government so as to reduce wastages and leakages,” Nwankwo explained.

He was optimistic that, the new debt strategy plan valid for next four years is appropriate given the present economic circumstance of the country.