In the last post on the Debt Management Office, I started discussing the establishment and the structural make-up of the Debt Management Office where I pointed out that though the Office can be said to be a creation of statute, its existence pre-dated the Act itself. I ended by throwing more light on the several departments in the Office and the units under them.
This time, I will be rounding up the overview of the Office, starting from its statutory functions to the achievements it has recorded since its terminus a quo.
In order to achieve its mandate and objectives, the Debt Management Office (Establishment, etc) Act 2003, gives the Office a wide range of functions. These functions are provided for under Section 6 of the Act. These functions give us a glimpse into the activities of the DMO. The functions are as follows, to:
(a) maintain a reliable database of all loans taken or guaranteed by the Federal or State Governments or any of their agencies;
(b) prepare and submit to Federal Government a forecast of loan service obligations for each financial year;
(c) prepare and implement a plan for the efficient management of Nigeria’s external and domestic debt obligations at sustainable levels compatible with desired economic activities for growth and development; and participate in negotiations aimed at realising those objectives;
(d) verify and service external debts guaranteed or directly taken by the Federal Government;
(e) on agency basis, service external debts taken by State Governments and any of their agencies: where such debts are guaranteed by the Federal Government;
(f) set guidelines for managing Federal Government financial risks and currency exposure with respect to all loans;
(g) advise the Federal Government on the re-structuring and re-financing of all debt obligations;
(h) advise the Minister on the terms and conditions on which monies, whether in the currency of Nigeria or in any other currency, are to be borrowed;
(i) submit to the Federal government, for consideration in the annual budget, a forecast of borrowing capacity in local and foreign currencies;
(j) prepare a schedule of any other Federal Government obligations such as trade debts and other contingent liabilities, both explicit and implicit, and provide advice on policies and procedures for their management;
(k) establish and maintain relationships with international and local financial institutions, creditors and institutional investors in Government debts;
(l) collect, collate, disseminate information, data and forecasts on debt management with the approval of the Board
(m) carry out such other function, which may be delegated to it by the Minister or by an Act of the National Assembly; and
(n) perform such other functions which in the opinion of the Office are required for the effective implementation of its functions under this Act.
In carrying out its function under Section 6 (1)(c) the DMO has designed and developed three strategic plans since its inception.
Already it has implemented the first two and it is currently riding on the wings of the third strategic plan which covers the period from 2013-2017. It also formulated the National Debt Management Framework which is meant to guide the policy and strategy for external borrowing by the Federal and States Governments.
When the DMO advises the Minister pursuant to section 6(1)(h), the Minister must comply with Sections 21(1) and 27(1) of the DMO before any loans can be taken. These sections have to do with laying the terms and conditions for borrowing before the National Assembly.
One function of the DMO (which is not contained in Section 6) is contained in Section 19 of the Act. The Section provides that:
(1)         The Office shall annually advise the Federal Government on the financing gap for the succeeding financial year and the amounts to be borrowed for bridging the gap both internally and externally.
The DMO should advise the Federal Government every year about the financial gap  for the next year and also advise on how to bridge that gap from internal or external sources. This advice would ordinarily not extend to state governments’ financing gap.
Achievements of the DMO since inception
In the pre-DMO era, Nigeria had had to contend with a myriad of challenges in managing her debts and was plunged into a debt trap such that it was becoming practically impossible to source for credit from international creditors to meet the country’s public sector funding requirements.
During its ten years of statutory existence, it has made some strides on the nation’s debt profile.
The most remarkable to date is its engineering of Nigeria’s exit from the Paris Club of creditor nations and the London Club of commercial creditors in 2006. This the office achieved working in tandem with the Minister of Finance.
The DMO, through its data gathering and dissemination activities have made information on Nigeria’s debt profile more readily available. Unlike in the past, where even in the corridors of government there was no reliable data on the country’s outstanding debts.
It is worthy of note, that other countries have established their own debt management institutions. For example, the UK has its DMO which is an agency under the UK Treasury Department. In the US there are a few but then the two main bodies are the Bureau of Public Debt and the Office of Debt Management. While the Bureau is responsible for obtaining the loans, the Office of the Debt Management is in charge of debt management policy and issuance of government related securities.
The DMO is a very crucial body in Nigeria’s economic fabric.  If Nigeria is to achieve Vision 20:2020, the role of the DMO must remain strategic in that pursuit.
To reach its potential, the DMO must be given financial and operational autonomy. It should not be subject to the caprices of politicians. The DMO must ensure that it data provision is up-to-date and responsive. This is why the quality of its staff need  to be improved upon so that they could remain above board to discharge their duties within the legislative setup of the Office.
Thank you.

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Nigerian Law Today

NLT’s mission is to take legal-content writing to the next level in Nigeria by leveraging legal expertise and technology. We publish fresh, original, and insightful articles on areas of law we cover.

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