Countries Across The World Borrow – DMO

The Director-General of the Debt Management Office, Patience Oniha, on Thursday claimed that borrowing to finance budget deficits and critical infrastructure is not bad in the real sense.

Oniha stated this while speaking during an awareness programme on security issuance organised by the Debt Management Office (DMO) in Lagos State.

The DG further stated that governments across the world borrow to finance critical infrastructure.

According to Oniha, previous administrations had to borrow to fund budget deficits, adding that annual budgets would be affected if funds were not raised to support them.

She added that the outbreak of Covid-19 across the world has made it impossible for some countries not to borrow.

Oniha said, “The issue of debt has become topical in Nigeria that sometimes it almost looks as if borrowing is an offence or a crime. The first thing we must understand is that countries across the world borrow, be it poor countries, advanced countries, developed countries, emerging markets, they all borrow.

“We usually hear complaints that debt levels are rising in Nigeria. Globally, debt levels are rising – not just in Nigeria.

“What has happened with COVID-19 is that countries needed to spend more, not only on health needs but on social needs as well, because we need to take care of the people who are losing their jobs. We need to create incentives for the private sector to continue operating to avoid a big recession because most countries experienced (recession).

“We did as well, but we came out of it after two quarters. Government spending is one of the tools you can use properly to exit a recession.”

Oniha added that the Federal Government is capable of creating job opportunities when it finances infrastructures across the country.

“We also borrow to finance maturing loan obligations like the Federal Government of Nigeria bonds and Nigeria Treasury Bills.

“The Fiscal Responsibility Act states that borrowing should be for capital purposes and human capital development.

“The DMO Act is also clear, especially on external borrowings. No arm of government can borrow on its own. It has to conform with those provisions and pass through the Federal Executive Council and the National Assembly.”