Federal government has released guidelines for the legal framework for states’ debt management operations for the achievement of the disbursement-linked indicator (DLI) under the States’ Fiscal Transparency Accountability and Sustainability (SFTAS) Programme of the central government.
This DLI requires that states to have robust state-level legislations which incorporates amongst others; responsibilities for contracting State debt, for recording and reporting State debt, as well as, fiscal and debt rules and/or limits for States.
The World Bank is using the programme to provide support for the federal government and the states in the states in area of financial management.
“DLI is most appropriate and relevant for debt management operation. The SFTAS Program has upscaled these initiatives, improved the level of commitment, and, brought a sense of urgency to improve public debt management at the Sub-national level. Overall, the outcome is a strong positive,” director-general of the debt management office (DMO) Patience Oniha said yesterday.
She made the remarks at a workshop for virtual presentation of the guidelines for the legal framework for states’ debt management operations yesterday in Abuja.
Some guidelines have been prepared to enable the states understand what should be contained in those laws. One of the areas of focus is ‘who has authority to borrow, what is the process for borrowing and what is the limit.
The workshop is designed to help states have a clear understanding of the guidelines and requirements of state debt legislation and the institutional frameworks required for efficient debt management operations, whose ultimate objective, is to ensure that borrowing is prudent and that debt is sustainable.
According to official figures, 23 states have already enacted laws and fiscal frameworks and by extension earned the SFTAS World Bank grant associated with its implementation.
Oniha said the DMO is committed to ensuring that the remaining thirteen (13) States meet this requirement.
The background is a 2016 adoption of the fiscal sustainability plan for sub-national governments. The agreement from both parties is that some things are needed to be done to improve financial management services at the state levels.
The aim is to migrate some of the federal government financial reform initiatives as the DMO act, IPPIS and financial responsibility act to the states to improve overall fiscal sustainability.
She said, “It’s a partnership, it’s a working relationship to work with the state governments to achieve some targets regarding debt, especially, to ensure they have the equivalent debt management law. Legislations and institutions are what make countries work. The SIFTES programme ensure that the requirements and agreements in the 2016 agreement are delivered. The DMO DG said the federal government is not setting a timeline for the states to implement the programme or compel them to domesticate it. She said there are incentives for states who implement the requirements for public finance management.’’