DMO Cautions States To Avoid Debt Crisis
THE Debt Management Office (DMO) has advised states to adopt measures that will prevent a debt crisis in their states.
Director-general of the DMO, Patience Oniha, stated this at a World Bank-supported workshop in Lagos, with the theme ‘Borrowing Guidelines for Top Policy Makers.’
The workshop was organised to enlighten the states on legal frameworks for borrowings.
Oniha explained that the workshop was informed by the need for subnational governments to understand that the country operates as one economy, stressing that actions of one level of government affects the other.
She called for the prudent utilisation of borrowed funds.
“The other part of the story is using the money well and making sure that you can manage your debt in a sustainable manner,” Oniha said.
“The reason why we want to work with the sub-nationals as to how to borrow is that it is not the federal government alone that borrows. There are various laws on borrowing and these have to be adhered to.”
The DMO chief further urged state governments to avoid debt distress, adding that Nigeria had gone through a debt crisis in the past.
“Everything necessary must be done to avoid a repeat,” she said.
Oniha asked state governments to explore public-private partnership (PPP) options for infrastructure financing as a means of reducing their funding burdens.
“PPPs can help improve Nigeria’s economy by attracting private sector investment and expertise to develop infrastructure and deliver public services,” she added.
According to her, this reduces the financial burden on the government, accelerates project delivery, and often results in higher quality outcomes. PPPs can also create jobs, stimulate local businesses and foster innovation.
The director-general also called for concerted efforts to optimise tax revenues, which, she said, would boost their fiscal health and reduce pressure.
She pointed out that efficient tax collection increases government revenue without raising tax rates, ensuring more funds are available for public investment in health, education, and infrastructure.
“Improved compliance and administration reduce leakages and corruption, making the tax system fairer and more predictable,” she said.
“Together, PPPs and efficient tax collection boost economic growth, enhance public services, and support sustainable development.
“So, revenues are absolutely important. It is important to keep surviving. You must raise revenues. Those borrowings must generate something that generates these revenues.”
On his part, Abayomi Oluyomi, Lagos state commissioner for finance, said there is an urgent need for subnational entities to adopt responsible debt management.
“Governments are put in place to cater for the needs of society, and fiscal and monetary policies should be aimed at creating comfort for the people,” Oluyemi said.
“Government is about the welfare and security of the people. There is a social contract between the government and the people.
“To achieve this, revenue is never enough. Borrowing is a cornerstone of sustainable development and economic resilience. Well-researched debt management policies are the foundation for borrowing.”
The commissioner said the state government is committed to sustainable debt management.
He, however, said the volatility of the exchange rate had significantly increased the state’s debt burden, resulting in a high debt rate.
