Borrowing: DMO issues serious warning to states

The Debt Management Office (DMO) has warned state governments to strictly adhere to the provisions of the Fiscal Responsibility Act and other relevant laws when seeking loans.

The Director-General of the DMO, Ms Patience Oniha, issued the warning at a workshop on borrowing guidelines for state government officials held in Abuja.

Oniha said the training formed part of the agency’s capacity-building efforts for sub-national governments, focusing on areas such as debt recording, debt sustainability analysis, medium-term debt strategy and approved borrowing procedures.

According to her, the programme is designed to ensure that states fully understand the legal framework guiding borrowing under the Fiscal Responsibility Act, the DMO Act, the Investment and Securities Act and the Nigerian Constitution.

“This workshop on borrowing guidelines is a targeted training. It is not about debt stock, but about understanding the requirements and the process for borrowing,” she said.

Oniha noted that delays in processing borrowing requests from states in the past were often due to poor understanding of laid-down procedures, despite the requirement that such requests pass through the Minister of Finance and the DMO.

She said the workshop was introduced to address these gaps and was expanded this year to allow broader participation, with each state represented by five to eight officials.

“There is no flexibility when it comes to the law. If it is in the law, you must comply,” Oniha stressed.

She added that a clear understanding of borrowing rules would help states access funds for development projects without avoidable delays, including loans from development finance institutions such as the World Bank.