The Federal Executive Council (FEC) has approved a new Medium-Term Debt Management Strategy (MTDS) that will guide the government in its borrowing activities for 2020-2023.
Disclosing this in a release by the Debt Management Office, DMO, the new MTDS was approved on Wednesday during the weekly FEC meeting in Abuja.
In the meeting, FEC explained that the MTDS has been tested and trusted to help in the management of Public Debt.
“The implementation of the Medium-Term Debt Management Strategies (MTDS) over the years, has helped in managing the structure of the growing public debt, and ensured debt sustainability, as well as effectiveness in public debt management.”
“With the approval of the Federal Executive Council of the MTDS, 2020-2023, the Strategy will be implemented to support economic development while ensuring that the Public Debt is sustainable.” It added.
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 its 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.
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Therefore, based on the current Public Debt Stock, Government’s borrowing needs in the medium-term, as well as future global trends, Nigeria’s 2020-2023 MTDS
“Borrowing will be from domestic and external sources but a larger proportion of new borrowing will be from domestic sources using long-term instruments while for External Borrowing, concessional funding from multilateral and bilateral sources will be prioritised”. It read.
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.
However, 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).
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