Finance & Economy

FEC Approves a New Debt Management Strategy for Nigeria for 2020-2023

The Federal Executive Council (FEC) at its meeting  Wednesday  , February 10, 2021, approved a new Medium-Term Debt Management Strategy for Nigeria, for the period 2020-2023.

The Medium-Term Debt Management Strategy (MTDS) is a policy document that provides a guide to the borrowing activities of a Government in the medium-term, usually four (4) years. It is recognized as one of the best practices in public debt management and is recommended by the World Bank (WB) and International Monetary Fund (IMF) to ensure that public debt management is driven by a well-articulated Strategy that is structured to meet a country’s broader macroeconomic and public debt management objectives. The MTDS, 2020-2023 has been prepared by the Debt Management Office (DMO), in collaboration with relevant stakeholders (Federal Ministry of Finance, Budget and National Planning, Central Bank of Nigeria, Budget Office of the Federation, National Bureau of Statistics and the Office of the Accountant-General of the Federation).

2. Nigeria has had two (2) Medium Term Debt Management Strategies (2012-2015 and 2016-2019), prior to the current Strategy. The new Strategy had to be re-worked to reflect the global and local economic impact of the COVID-19 Pandemic and incorporates data from the revised 2020 Appropriation Act and the Medium-Term Expenditure Framework 2021-2023. Thus, the new MTDS adequately reflects the current economic realities and the projected trends.

3. The preparation of the MTDS usually involves the consideration of alternative funding strategies available to Government, as it seeks to meet its financing needs, taking into consideration the cost of borrowing and the associated risks, while ensuring debt sustainability in the medium to long-term.

4. The 2016-2019 MTDS included some Debt Management Targets. The Targets and the Actuals at the end of the Strategy period, (that is, as at December 31, 2019) are shown in Table 1. As can be seen from the Actual Outcome, the MTDS, 2016-2019 was 2 applied in the borrowing activities of the Government during the period which led to the high success rates achieved.

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