From Juliana Taiwo-Obalonye, Abuja
Professor Chukwuma Soludo, former Central Bank of Nigeria governor and Anambra State Governor has accused the Federal Government of plunging the nation into inflation with recklessness with respect to borrowings and lack of regards to the rule of law in debt management.
He stated this while chairing a panel session on the economy at the ongoing 2023 Induction Programme for incoming and returning governors in Abuja.
According to him, in order for the Debt Management Office (DMO) to effectively regulate both the states and the federal government in accordance with the law of debt management, in his opinion, it should be a federation agency rather than a federal agency.
He asserted that because the DMO is an agency of the federal government, it is powerless to control more serious financial problems that truly impoverish the entire nation.
Soludo said the DMO ought to be a federation agency like the NSIA instead of being an arm of the federal government.
“It is the Federal Government’s recklessness, you know you set out all these bench marks, Debt service to revenue 40%, this and that, they only enforce them in respect to the state. And then, the federal government breaks them with reckless abandon. Even not just the regulating of the DMO, they break the law recklessly and nobody holds them to account. And they say let’s hold the states, and say you don’t exceed this, you don’t exceed this. And they go and take trillions and pour in and then inflation swallows all of us. It’s big issues for us to discuss in the future so I don’t envy you DG” he said.
Earlier, Debt Management Office (DMO), Ms. Patience Oniha, while addressing the incoming governors highlighted guidelines guiding both domestic and foreign borrowings by both the state and the federal governments.
She explained that provisions must be made for debt servicing and the state must operate within the limits of 40% debt service to revenue ration.
She added that all of these were World Bank tools and that her organization performed debt sustainability analysis in partnership with other pertinent organizations, where debt management performance evaluation played a crucial role. She pleaded with the incoming governors to always borrow for investments rather than consumption.
“It is extremely important that you prioritize expenditure. You should not borrow for consumption rather you borrow for investments” she said.
In his remarks, MD/CEO at Financial Derivatives Co Ltd, Bismarck Jemide Rewane lamented that Nigeria’s economy is stagnating when compared to it’s peers.
According to him, Nigeria has no choice but to reform to ensure the desired economic growth.
“Nigeria has no choice but to reform, in that way both the government, the governed and the people would be better for it” he said
Also, speaking on the topic of the economy, the Chief Executive Officer of Economic Associates (EA), Ayo Teriba, said, borrowing based on income would lead the states into the type of trap that federal government entered.
“The way forward is to turn to assets” he advised.
