Member nations of the West African Institute for Financial and Economic Management (WAIFEM) should develop an organisational structure and legal framework for debt portfolio analysis, the Director General of the institute, Baba Yusuf Musa, has said.
The DG spoke at the training on Subnational Debt Management Performance Assessment (SN DeMPA) Methodology Tool, organised in collaboration with the World Bank in Abuja on Tuesday.
Musa said the structure should be established at both national and sub-national debt levels for effective debt portfolio analysis.
Also, he said the legal framework should include clear debt management objectives, authorization to borrow and other debt management activities and capacity to issue loan guarantees, requirement for strategy development, and accountability as well as reporting.
In addition, he said the structure should be manned by skilled staff with adequate capacity to undertake risk analytical in their debt management activities.
WAIFEM was established in 1996 by the central banks of the five West African Anglophone countries, namely The Gambia, Ghana, Liberia, Nigeria, and Sierra Leone (with Guinea as an observer) to undertake the training of personnel in member countries in macroeconomic, public debt, and financial sector management,
In the past 27 years of its existence, WAIFEM successfully carried out over 874 capacity building programmes that benefited well over 24,492 public sector managers from the sub-region and beyond.
The institute as successfully partnered with reputable international institutions such as the International Monetary Fund (IMF), the World Bank, African Development Bank (AfDB), the Commonwealth Secretariat, Development Finance International, the World Trad Organization (WTO), Debt Relief International, United Nations Institute for Training and Research (UNITAR), and United Nations Economic Commission for Africa (UNECA) to ensure high quality in the delivery of its training and capacity building programmes.
WAIFEM has undertaken institutional adjustment to address emerging capacity-building challenges in the West African region to serve the member countries better, particularly on issues related to good governance, institution building, regional integration, reserve management, new trends in global finance such as Fintech, and cybersecurity.
Since 2007, Musa said the World Bank introduced the Government Debt Management Performance Assessment (DeMPA) Tool as part of the armoury for effective debt management performance.
The tool, he explained, provides mechanism for assessing debt management performance in developing countries at national and sub-national levels of government based on the public expenditure and financial accountability (PEFA) format for public financial management and sound practices in government debt management.
He said the DeMPA was useful in conducting country dialogue, guiding the design of debt management reform programmes, enhancing donor harmonisation, and monitoring performance over time.
The DeMPA tool, the DG further explained, catalyzes inter country comparison of debt management performance in the evolution of best practices.
He said the current training was not only a follow-up exercise to create awareness on current issues, but to strengthen the benefits of DeMPA training held in June 2021 following the COVID-19 pandemic.
The severe adverse socio-economic impacts of the pandemic, he noted, resulted in falling revenues, combined with the costly pandemic relief measures, to raise the debt-to-GDP ratios in most of the countries in the sub-region.
He cited the case in Nigeria, where the Debt Management Office figures shared that the country’s public debt stock rose to N44. 06 trillion in the third quarter of last year from N39.56 trillion at the end of 2021. The figure has since risen to over N77.3 trillion when the disbursements by the CBN on Ways & Means is added to the overall debt portfolio.
The country’s total public debt stock, consisting of the domestic and external debt stocks of the Federal Government, 36 state governments and the Federal Capital Territory, was put at about N46.25 trillion (USD103. 11 billion) at the end of December 2022.
He decried the absence of any near-term Stabilisation, saying borrowing levels were expected to run well above pre-COVID 19 levels in many countries and sectors again in the current year.
Emphasising the benefits of regular training interventions, Musa said the trading by World Bank and WAIFEM was initiated for all WAIFEM member countries to receive DeMPA missions at national and sub-national levels of government.
The training, he said was designed to provide in-depth knowledge in the methodology and operational modalities of the tool, rationale, scope, coverage, and application of the DeMPA tool and preparation of reform plans.
Acknowledging the continuous contributions by the CBN and the World Bank towards WAIFEM’s mandate, the DG thanked representative of the CBN, the Debt Management Office, the World Bank Team of Facilitators (made up of Jose Franco and Ying Li), for their support.
In his introductory remarks, the Director, Monetary Policy Department of the CBN, Hassan Mahmud, who is also a member Technical Committee of the Board of Governor of WAIFEM commended the decision to extend the training to state governments to enhance their debt management and maximize the benefits of public borrowing through capacity building.
Mahmud said this would allow the country to reach even greater heights in embracing sound practices in public debt management.
He acknowledged the extension by another one year till June 2024 of the three-year grant agreement DMF lll (2021-2023) to Nigeria, saying this would ensure the sustainability of the planned programmes.
The Director of CBN said the support to Nigeria at this time emphasizes the importance of public debt transparency, which has become crucial for lenders and borrowers due to the shifting landscape of creditors and instruments and the resultant lack of accountability and transparency in borrowing contracts.
