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ABOUT DMO NIGERIA
....MISSION
STATEMENT.....
As a formal institution
concieved exclusively on Nigeria debt position, the DMO will provide
the accurate transparent data and research with which the country
would meet her creditors. The DMO shall help encourage the conditions
to attract foriegn investment which is non-debt creating.
STRENGTHENING
DEBT MANAGEMENT SYSTEM IN NIGERIA - THE DEBT MANAGEMENT OFFICE
IN PERSPECTIVE
Introduction :
The establishment of an effective and efficient debt management
system is now widely recognized as a major element of a sound
economic management strategy, because of the crucial link with
fiscal and monetary policies as well as overall macroeconomic
economic management. Below is an outline of recent progress made
in strengthening the debt management system in Nigeria.
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Background
to the Creation of DMO :
For a long period of time, debt management
arrangements in Nigeria have been characterized by major shortcomings.
One area of weakness was the diffusion of responsibilities across
a multitude of agencies. At the beginning of 2000, responsibilities
for debt servicing were split across seven different agencies
or government departments, viz, External Finance Department of
the Ministry of Finance; Multilateral Institutions Department
of the Ministry of Finance; African and Bilateral economic Relations
Department of the Ministry of Finance; Home Finance Department
of the Ministry of Finance; Treasury Department of the Accountant
General's Office; Debt management department of the Central Bank;
Debt Conversion Committee Secretariat of the Central Bank; and
Public Debt Office of the Central Bank. Cooperation and collaboration
among these different agencies was weak and information flow poor.
In addition to the coordination problem above, debt data recording
system was inadequate. In some cases, this was manually carried
out. Loan records were incomplete, making it difficult to reconcile
statements with creditors. Other deficiencies in the system include
complicated and inefficient debt service/payment arrangements,
which resulted in protracted delays payment delays and incurring
of penalties; low quality human resources; and a lack of a well-defined
debt strategy, among others. The Federal Government of Nigeria
undertook a major step in addressing these problems recently by
establishing a semi-autonomous Debt Management Office. The creation
of the DMO consolidates debt management functions in a single
agency, ensuring proper coordination. The DMO centralizes and
coordinates the country's debt recording and management activities,
including debt service forecasts; debt service payments; and advising
on debt negotiations as well as new borrowings.
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Objectives
and Functions of the DMO :
The broad objectives of establishing the DMO are to rationalize
and streamline the management of the country's debt with a view
to sharpening strategic focus and achieving operational efficiency.
The DMO's specific functions include:
DMO Organizational
Structure and Staffing :
The new Debt Management Office is being developed in a phased
manner, with initial focus set on the centralization and consolidation
of external debt management functions hitherto undertaken by the
Federal Ministry of Finance and the Central Bank of Nigeria. The
second phase will focus on incorporation of domestic debt management
activities, to ensure proper linkage with fiscal and monetary
policies. The DMO is headed by a Director-General, assisted by
Departmental Directors. Directors supervise the work of Team Leaders.
To ensure continuity, a complement of core staff have been constituted
through meticulous selection of good performers from the Central
Bank Debt Management Department and the External Finance Department
of the Ministry of Finance - the principal units that have hitherto
been dealing with debt. They now form the rubric of the Loan Administration
and Data management Department as well as the Portfolio Management
and Strategy Department. Work is organized around teams.
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Progress
and Achievements :
The DMO enjoys strong political support and backing from Nigeria's
leadership. The office has been playing a major role in facilitating
debt-rescheduling negotiations between Nigeria and the London
and Paris Club of creditors, and in securing debt relief. It is
also expected to provide important input into macroeconomic management,
particularly in crafting an overall debt strategy that addresses
issues relating to future borrowing and debt restructuring operations.
Since inception, the DMO has made considerable progress in auditing
the country's loan portfolio, updating and computerizing the debt
database, and reconciliation of figures. Efforts are also currently
underway to strengthen the external debt service procedures, with
a view to improving efficiency and timeliness, while maintaining
effective controls and safeguards. The DMO has been actively involved
in negotiations for the rescheduling of Nigeria's external debts.
These negotiations have resulted in agreement with the Paris Club
on the rescheduling of the country's external debts owed to this
group of creditors. The agreement is structured on Houston Terms,
and provides for the rescheduling of debts totaling $21.4 billion
over an 18-20 year period. To consolidate the gains from this
rescheduling agreement, DMO officials have been meeting with individual
creditor countries to negotiate bilateral agreements. These will
set out in more detail the debt rescheduling arrangements, which
are expected to be concluded by end of June, 2001. In parallel
to the Paris Club debt rescheduling negotiations and the campaign
for debt relief, the DMO has worked with a team of financial advisors
to explore options for the restructuring of Nigeria's commercial
debts. The objective of the proposed restructuring is to reduce
the country's London Club commercial debt stock by taking advantage
of current market opportunities. The restructuring also seeks
to reduce debt service payments over the short to medium term.
A decision on the timing of this transaction will take into account
the overall framework for restructuring the country's debt portfolio
- including the Paris Club debts. Over the medium term, the DMO
is supporting Nigerian government's efforts to obtain deeper and
more substantive debt relief from its creditors and to formulate
a sustainable debt strategy for the country. An international
conference is being hosted in Abuja, to sensitize the international
community about the severity of Nigeria's debt problem, as well
as build consensus on a sustainable debt strategy. While the initial
focus of DMO's activities has been on external debt management,
it is also expected to assume responsibilities for domestic debt
management. The incorporation of domestic debt management functions
into the DMO will be commenced during the second half of this
year. Established in September 2000, the Debt Management Office,
Abuja is supportive of the overall efforts to strengthen governance
by improving transparency and accountability. This is an important
comfort to creditors seeking to extend new credit lines or reschedule
debts.
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Akin Arikawe
Director General
Debt Management Office
Abuja, Nigeria
April 27, 2001
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DMO
MISSION STATEMENT
"TO TRANSFORM NIGERIA'S DEBT
PORTFOLIO INTO AN ASSET FOR GROWTH AND DEVELOPMENT"
VISION
"TO BUILD A WORLD-CLASS DMO
CAPABLE OF
MAKING NIGERIA'S DEBT SUSTAINABLE BY 2006"
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