Tuesday, February 23,
2021 / 5:43 PM / by DMO / Header Image Credit: DMO
Nigeria's Medium-Term Debt Management Strategy (MTDS), 2020-2023, is formulated to guide the borrowing activities of the Government in the medium-term. The framework compares alternative funding strategies available to Government as it pursues the desired structure of debt portfolio that reflects the selected strategy considering the costs and risk trade-offs in the medium-term.
Following the expiration of the MTDS, 2016-2019 in December 31, 2019, it became imperative to develop a new Strategy for another term, 2020-2023. To this end, the Debt Management Office (DMO), in collaboration with relevant stakeholders - The Federal Ministry of Finance, Budget and National Planning (FMFBNP); Central Bank of Nigeria (CBN); Budget Office of the Federation (BOF); National Bureau of Statistics (NBS); and Office of the Accountant-General of the Federation (OAGF), with technical support from the World Bank, IMF and the West African Institute for Financial and Economic Management (WAIFEM), proposed a new Debt Management Strategy for the period, 2020 â€“ 2023.
While the Report of the new MTDS was being finalised for approvals, by the Honourable Minister of Finance, Budget and National Planning (HMBNP), and thereafter, Federal Executive Council (FEC), the global economy was hit by the COVID-19 pandemic. The fiscal position of most countries including Nigeria worsened.
In the case of Nigeria, the impact of COVID-19 on crude oil prices saw over a 50 percent dip in Revenue, and a reduction in Crude Oil production and sale, as well as a limitation in terms of the level and sources of funding available to the Government, including access to the International Capital Market (ICM). These developments rendered the various assumptions and projections of the Draft MTDS, 2020-2023 exercise unrealistic, hence, the need for a revision of the Draft Strategy.
Review of the 2016-2019 Medium-Term Debt Management Strategy
The outcome of the implementation of the MTDS, shows progressive improvements over the 2015 levels, for all the Indicators, during the implementation period, with some outcomes exceeding the Targets set in the Strategy. These are highlighted in Table 1.
The review of the MTDS, 2020-2023 took into consideration the following parameters: