FG is not choking out private sector from bond market, says DMO
The Director-General of the Debt Management Office (DMO), Dr. Abraham Nwankwo, has dismissed fears that the federal government borrowings choke out private sector from the bonds market.
He said that on the contrary the government has assisted private sector operators to raise long-term funds from the bond market.
Nwankwo spoke as THE CITIZEN maiden annual lecture on Thursday.
Speaking on the topic 'Paris Club Exit & New Debt: A growth Imperative or Avoidable Dilemma?,' the chief executive of DMO said that it was the civilian administrations dating back to Obasanjo regime that rejuvenated the bonds market which was moribund during the military era.
However, Nwankwo said that rather than accuse the federal government of crowding out the private sector, government should be commended for reviving the bond market, which has been dormant for many years and has made it more attractive for both private and public sector to access funds.
Speaking in Lagos at the Citizen Newspaper maiden annual public lecture on 'Paris Club Exit & New Debt: A growth Imperative or Avoidable Dilemma?,' Nwankwo said the current civilian dispensation revived the bond market that was abandoned by the military regime and made it possible for private companies to access long term funds.
'There was no market for long term funds. The market was abandoned during the military era, so there was no market. It was the civilian government that developed the market and has made it attractive for borrowing long term funds,' he said.
Although Nwankwo admitted that the government has been a net borrower in the market, it has reduced its level of borrowing.
'The government has reduced its borrowing from the domestic market since 2010. The government borrowed about N1 trillion in 2010. This fell to N830 billion in 2011 and the borrowing target this year as contained in the budget is N577 billion. So having built the market, the government is now tactically reducing its borrowing and allowing private sector operators to raise funds from the market,' he said.
Justifying his position that the private sector has benefited remarkably from the bond market, the DMO boss said 20 companies raised N200 billion from the market between 2007 and 2012.
Nwanko said that apart from N200 billion that was raised from the domestic debt market, other firms have accessed the international capital market for funds following the successful issuance of $500 million federal government's Eurobond that opened the way for other private firms.
He also praised the vision of the Nigerian government in exiting the Paris Club, saying that it has in no small way bolstered the integrity of the Nigerian economy in the international community.