The Debt Management Office (DMO) says countries borrowing to finance budget deficits and critical infrastructure is not necessarily bad.
Patience Oniha, chief executive of the DMO, said Thursday in Lagos. She spoke on the sidelines of an awareness program on securities issuance organized by her office.
Ms Oniha said government borrowing was done by all countries around the world, mostly to fund critical infrastructure.
According to her, the multiplier effects of quality infrastructure on a country’s economy cannot be quantified.
She added that successive Nigerian governments had to resort to borrowing to finance budget deficits, adding that annual budgets would be affected if funds were not raised to support them.
“The issue of debt has become a hot topic in Nigeria, and sometimes it almost seems like borrowing is a misdemeanor or a crime,” Ms Oniha said. “The first thing we need to understand is that countries around the world are borrowing, whether it’s poor countries, advanced countries, developed countries, emerging markets. They all borrow.
The managing director said the advent of COVID-19 has also made borrowing imperative for some countries.
“In Nigeria, we borrow to finance budget deficits. Sometimes we borrow to fund specific projects and services like railways and airports. Infrastructure financing is a saving in itself. This creates jobs in all sectors,” said the managing director. “We also borrow to fund maturing loan obligations like Nigeria Federal Government Bonds and Nigeria Treasury Bills.”
According to her, there are statutory laws that regulate borrowing by governments at different levels and prevent abuse of the process.
“The Fiscal Responsibility Act states that borrowing must be for capital purposes and human capital development. The DMO law is also clear, especially on external borrowing,” she added.