Cardoso Demands Effective Debt Management to Meet Funding Needs

Olayemi Cardoso, the Governor of the Central Bank of Nigeria, has emphasized the importance of implementing a robust debt management strategy to address the country’s revenue requirements for funding crucial infrastructure, education, healthcare, and essential services.

This approach aims to ensure that current investments do not compromise the prosperity of future generations.

In order to achieve debt management goals such as obtaining essential financing at the most favorable rates while responsibly handling risk, the CBN governor emphasized the importance of enhancing the domestic debt market in specific cases.

It is essential to enhance national capabilities for debt management to effectively meet the government’s financial requirements both presently and in the future with a focus on cost-efficiency and risk awareness.

Cardoso highlighted the necessity for countries to prioritize establishing a diversified and resilient debt portfolio during a regional training session on creating annual borrowing plans, which was co-hosted by the World Bank, International Monetary Fund, and West African Institute for Financial and Economic Management (WAIFEM).

Cardoso, speaking through CBN’s Ladi Bala-Keffi in Abuja, emphasized the importance of creating a functional Debt Management Strategy (DMS) to showcase the government’s dedication to its fiscal plan.

This move enhances transparency and accountability in debt management, easing concerns among investors and enabling productive discussions with various stakeholders, including credit rating agencies.

The CBN governor highlighted the advantages of establishing a strong annual borrowing plan (ABP) for Nigeria and Africa.

The ABP was described as a tool that helps debt managers anticipate and address risks before they become problematic, like refinancing uncertainties or exposure to currency and interest rate fluctuations.

According to Baba Yusuf Musa, the Director General of WAIFEM, the region is grappling with unstable commodity prices, high debt levels, constrained fiscal capacity, fluctuating exchange rates, and increasing borrowing expenses. These factors collectively endanger debt sustainability, macroeconomic stability, growth opportunities, and the overall welfare of the population.

He emphasized the importance of sound public debt management strategies and clear borrowing plans in the current context, stating that continuous monitoring and evaluation of annual borrowing plans are essential for adapting to changing economic conditions and policy priorities.

The training, which includes participants from various regions, aims to provide a comprehensive understanding of the role of Annual Borrowing Plans (ABP) in public debt management.

It covers the key elements needed for effective ABP development, such as reliable data, institutional cooperation, and solid analytical frameworks.

Participants will review fundamental concepts related to medium-term debt strategies, emphasizing their crucial role in setting borrowing goals and risk parameters. Additionally, the training will introduce an ABP analytical tool through practical exercises using real-world data.