DMO Clarifies N2.2trn Debt Service Provision In 2018 Budget

The Debt Management Office on Monday dismissed claims in some quarters that it was unable to
account for the N2.2trn allocation for debt service in the 2018 Appropriation Act.

It described the claims which were reported by some media outlets (Not THE WHISTLER) as not only false, but extremely misleading.

The media outlets had made the pibkicati following the DMO’s appearance at the hearing of the Public Accounts Committee of the House of Representatives last Friday.

At the session, the Committee had enquired about the utilisation of the N2.2trn provided in the 2018 Appropriation Act; of which N2.1trn was allocated for debt service and the DMO’s appropriation of N721,251,798 making it N2.2trn.

But the Agency in the statement issued on Monday stated that it explained to the Public Accounts Committee that the debt service amount of N2.2trn was not available as the DMO’s total allocation.

The statement said the DMO made the point since N2.1trn was specifically meant for servicing of Nigeria’s domestic and external debt.

This, it noted, explains why the amount for debt service is expressly stated as a separate line item in the annual Appropriation Acts, while the DMO’s expenditure is also stated separately.

The statement reads in part, “DMO wishes to emphasise that the provisions in the Annual Appropriation Acts for debt service, including the 2018 Appropriation Act, are dedicated for debt service payments only; that is, for the repayment of Principal, Interest and Other Charges for both Domestic and External Debt.

“Indeed, the funds for debt service are never released to the DMO for spending, rather, in line with the mandate of the Office of the Accountant-General of the Federation, the funds are domiciled with the OAGF, who on the advice of the DMO, effects payments directly to the creditors as at when due.

“Such creditors include multilateral and bilateral lenders like the World Bank, African Development Bank, Exim Bank of China, investors in Nigeria’s Eurobonds, as well as, investors in securities issued in the domestic market such as FGN Bonds, SUKUK, Green Bonds and Nigerian Treasury Bills.”

The Agency urged the general public to note that servicing of public debt is absolutely necessary to ensure that Nigeria remains credit-worthy and retains or improves on its sovereign rating which ultimately, will support growth and development.

The DMO explained that it is for this reason as well as transparency purposes, that debt service was expressly provided as a line item in the Annual Appropriation Acts.