As the new management at the Debt Management Office (DMO) settles down to repositioning the organisation into a first-class institution, it has been revealed that its Savings bond initiative has cumulatively raked N6 billion into government coffers.
Director General of DMO, Ms Patience Oniha who was appointed on July 1, 2017, said: “We are trying to set certain practices and standards of work because the DMO should be up there as one of the top public service institutions.”
Speaking with Nigerian Tribune in an exclusive interview, she disclosed that “cumulatively, we have been able to attract over N6 billion from the national savings bond”, which purpose is to encourage a national savings culture and create an avenue for investors to benefit from favourable returns available in the capital market.
Narrating the transactions embarked upon within the seven months that she has been in the saddle, the pioneer Head of Efficiency Unit in the Federal Ministry of Finance said “we started with the Sukkuk, which we issued in July.
“We did the green bond in the domestic market in December and then we did the $3 billion Eurobond issuance in November,” emphasizing that “for the first time we issued a 30-year Eurobond on a clean note meaning there is no guarantee or World Bank/IMF backing”, hitherto achieved by only South Africa.
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While expressing some worry about Nigeria’s tax to GDP ratio and debt payment to GDP ratio, Oniha said “what we are trying to do as DMO also is to say our debt service level is high because we have a large part of our debt in the domestic market where interest rates are high and I believe if you have been tracking interest rates, you will know that at some point, they got to 18 percent.
“We know that whereas it is cheaper to borrow externally because you can get it for a longer tenure, our external debt to GDP as at September 2017 was about 23 percent.”
“And since our target has always been 40 percent for that, there is still room. So, part of the $3 billion we got approval to refinance is to reduce our domestic debt.”
“Rather than borrowing, using treasury bills at that time at between 17 and 18 percent- as you know, we borrowed at 6.7 and 7 percent- the cost came down. In essence, Federal Government is working on the two sides- trying to moderate debt service and trying to increase revenues. Our debt is, therefore, sustainable,” she explained.
The Chief Debt Officer who first joined the organisation in 2008 gave the assurance that Nigeria’s has a debt to GDP ratio, which is amongst the lowest in the world.
“So if you are measuring sustainability, in terms of debt to GDP ratio, it is still very low. We had a debt to GDP ratio that was below 18 percent but we are still compiling figures for December 2017 because we have to reconcile with foreign creditors.”
She also reiterated the importance of diversifying and growing the economy saying “if the economy is growing, then taxes- whether income tax, whether companies’ income tax would also grow and other levies, fees and import duties” as “revenues are supposed to be coming from sources other than oil.”
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