Africa must prioritise building balanced, resilient debt portfolio –Cardoso

 4th June 2024

Dr.-Olayemi-Michael-Cardoso1

Governor, Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has emphasised the need for African countries to prioritise establishing a well-balanced and resilient debt portfolio.

Cardoso spoke during the opening ceremony of the regional training on Annual Borrowing Plan (ABP) Development jointly organised by the World Bank, the International Monetary Fund (IMF) and West African Institute for Financial and Economic Management (WAIFEM) which held in Abuja yesterday.

The CBN boss, who was represented by Dr. Ladi Bala-Keffi, Acting Director, Monetary Policy Department, noted  that effective debt management was not just a technical exercise but a strategic necessity in today’s interconnected world.

“It ensures that governments can finance critical investments in infrastructure, education, healthcare, and other essential services without jeopardizing the well-being of future generations. Strengthening national capacities for debt management is crucial for meeting the government’s funding needs both now and in the future in a cost-effective and risk-conscious manner. Our countries must prioritize building a balanced and resilient debt portfolio,” he said.

Cardoso highlighted that the foundation of effective public debt management lies in the Debt Management Strategy (DMS), a structured plan created by the government to meet its debt management goals. These objectives, he said, usually involve obtaining essential financing at minimal costs, handling risks, and in some instances, fostering the growth of the domestic debt market.

He emphasised that crafting a strong DMS and ABP necessitates a holistic approach, integrating a well-coordinated institutional structure for public debt management within a stable macroeconomic setting.

“Strengthening the budgetary process and accounting systems to enhance transparency and accountability is also essential. Investing in human capital and capacity development is equally crucial. We must continuously provide our debt management professionals with the necessary training, mentorship, and technical assistance.” He added.

On his part, Director-General, WAIFEM, Dr Baba Yusu Musa, mentioned that the training was specifically crafted to tackle challenges by offering a structured framework for implementing Medium-Term Debt Strategies (MTDS) annually.

He stressed the importance of the course in light of current global economic vulnerabilities and uncertainties resulting from events like the COVID-19 pandemic and ongoing geopolitical tensions worldwide, which impact the execution of Medium-Term Debt Strategies (MTDS).

Musa explained that the training was tailored to tackle this concern by offering a structured framework for implementing the Medium-Term Debt Strategies (MTDS) annually.

He further noted that the training offered a comprehensive insight into the significance of the ABP in public debt management, emphasising the essential components for successful ABP Development, such as reliable data, institutional cooperation, and robust analytical frameworks.

“This approach facilitates a more granular and actionable approach to debt management, ensuring the translation of strategic objectives into concrete borrowing activities and targets for the fiscal year. Aligning with the government’s budgetary and fiscal policy objectives, the ABP determines the sources of financing, instrument types, and maturities while remaining mindful of prevailing market conditions,” he added.

SOURCE:THE SUN

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