The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, says strengthening national capacities for debt management is crucial for meeting government’s funding needs.

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).

BRANDPOWER reports that the training was jointly organised by WAIFEM, the World Bank, and the International Monetary Fund (IMF).

Cardoso’s address was delivered by Mrs Ladi Bala-Keffi, the Acting Director, Monetary Policy Department of the CBN.

According to Cardoso, our countries must prioritise building a balanced and resilient debt portfolio.

He said that 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 that publishing the Debt Management Strategy (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 that 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.

The Director-General of WAIFEM, Dr Baba Musa, said that the training was a significant milestone.

According to Musa, recognising the critical importance of ABP development, we proudly offer this course as a standalone for the first time.

He said that public debt had recently surged worldwide due to various factors like the COVID-19 pandemic, geo-political tensions, and other economic shocks.

“This trend is mirrored in our sub region, where debt managers grapple with unique challenges, including volatile commodity prices, elevated debt levels, limited fiscal space, fluctuating exchange rates, and rising borrowing costs.

“These challenges pose significant threats to debt sustainability, macroeconomic stability, growth prospects, and, ultimately, the well-being of the citizens.

“In this context, sound public debt management strategies and well-articulated
borrowing plans are more critical than ever,’’ he said.

He said that WAIFEM member-countries diligently formulate and update Medium-Term Debt Strategies (MTDS), but faced considerable implementation challenges.

According to him, the training on ABP Development is designed to address such challenges by providing a structured framework for operationalising the MTDS annually.

“This approach facilitates a more granular and actionable approach to debt management, ensuring the translation of strategic objectives into concrete borrowing activities and targets for the fiscal year.

“Aligning with the government’s budgetary and fiscal policy objectives, the ABP determines the sources of financing, instrument types, and maturities while remaining mindful of prevailing market conditions,’’ he said.

BRANDPOWER reports that WAIFEM is a regional capacity-building institution founded in 1996 by the central banks of the five West African Anglophone countries; the Gambia, Ghana, Liberia, Nigeria and Sierra Leone.

Its mandate is to enhance the skills of policymakers and practitioners in financial and economic management.