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Technical assistance to States on sustainable debt management already yielding results – DMO


As part of it’s mandate to state governments, the Debt Management Office says the capacity building and technical assistance to help states build sustainable debt management is already yielding results.

The Director General, Debt Management Office, Mrs. Patience Oniha, made this known at a media workshop organized by the States Fiscal Transparency, Accountability and Sustainability(SFTAS) programe office, for members of the Finance Correspondents Association of Nigeria, in Abuja.

Represented by Dr. Isyaka Mohammed, the DG said the DMO has helped states to set up their debt management departments as well as provide regular training and capacity building to help them achieve the debt-related disbursement linked indicators(DLIs).

These efforts according to Oniha has led to strengthened pubic debt management and fiscal responsibility framework, an improved reduction of stock of domestic expenditure arrears, as well as improved debt sustainability for states.

She noted that DLI 8 trend in 2018 indicated that only one out of twenty four eligible states met the criteria for arrears clearance framework, however in 2020, there was an increase as seven out of thirty-two states met the framework criteria.

The DMO boss further explained ,that
SFTAS on it’s part provided the opportunity to further strengthen debt management at the subnational level while introducing key reforms that are already being utilized at the national level.

Despite the improved debt management and stability recorded between the year 2020 and 2021, Oniha highlighted some challenges that may militate against sustainability .

They include “Legal Framework: as States may not implement important components of the law. For example, the States may not adhere to the responsibility for contracting State debts.

“Debt Sustainability Analysis and Preparation of Medum-Term Debt Strategy. The year 2020 is the first year of preparing the DSA reports at the sub-national level, while 2021 is the first year for the MTDS. These two reports are still at the nascent stage.

“Ensuring actual use of DSA and MTDS reports might be challenging. Ensuring that debt stock to revenue ratio remains low in absence of performance-based grants.

“Arrears Clearance is still weak across most States”.

Meanwhile, she recommended engagements with states to ensure that debt management and fiscal responsibility laws are implemented .

Also aggressive sensitization to state governments on the benefits of Debt sustainability analysis and medium term debt strategy, among others.

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