The governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, says strengthening national capacities for debt management is crucial for meeting the government’s funding needs.
Mr Cardoso said this on Monday in Abuja at the opening of the Regional Training on Annual Borrowing Plan (ABP) Development organised by the West African Institute for Financial and Economic Management (WAIFEM).
The training was jointly organised by WAIFEM, the World Bank, and the International Monetary Fund (IMF).
Ladi Bala-Keffi, the acting director of the monetary policy department of the CBN, delivered Mr Cardoso’s address.
According to Mr Cardoso, countries must prioritise building a balanced and resilient debt portfolio.
He said at the core of sound public debt management was the debt management strategy (DMS), a formal plan devised by the government to achieve its debt management objectives.
“These objectives typically include securing necessary financing at the lowest possible cost while prudently managing risk.
“Additionally, developing the domestic debt market may also be a key objective in certain instances.
“A DMS operationalises these objectives by outlining the government’s preferences regarding the trade-offs between cost and risk associated with its chosen strategy.
“This strategy is typically established with a three- to five-year horizon and is assessed, reviewed, and updated on a rolling annual basis,” he said.
He said publishing the DMS was essential, as it demonstrates the government’s unwavering commitment to its fiscal strategy, promoting transparency and accountability in debt management practices.
According to him, this mitigates investor uncertainty and facilitates constructive dialogue with creditors, investors, and other key stakeholders, including credit rating agencies, regarding the optimal financing strategy.
He said the DMS was implemented annually through an ABP.
“This plan translates strategic objectives into concrete actions for raising funds and managing the government’s debt portfolio based on budget analysis and cash flow projections,’’ he said.