Govt to access international and domestic capital markets

Government would continue to focus on providing a more cost-effective access to the international and domestic capital markets as a debt management strategy.

Finance Minister Seth Terkper, who announced this, said it would also support multilateral as well as improvements of the domestic capital market to meet national development needs.

Mr Terkper, who was presenting the 2015 Budget Statement to Parliament, said the government would consolidate its policy of using short-term borrowings, primarily for liquidity management purposes, and long term borrowings for capital expenditure.

“In this regard, government will continue to work towards extending the yield curve to 10 years,” he said.

The Minister also announced key initiatives to consolidate sustainability and efficiency in debt management, including the Sinking Fund.

He said the government would operationalise the Sinking Fund to manage the orderly redemption of Sovereign Bonds and other debt instruments in 2015 in accordance with the Financial Administration Regulations.

Under the Sinking Fund, he said, the Government would set aside funds to liquidate maturing debt.

Mr Terkper said the experiment with the cap of the Stabilisation Fund that Parliament approved, clearly showed that the Sinking Fund could be financed from the excess over the cap set aside for debt servicing.

In this regard, he said, the government was proposing the concept of a moving cap and percentage allocation to address all the goals of the stabilization Fund - growing the Fund, contingency and debt service.

Besides, he said, the government would continue with the on-lending and escrow arrangements in 2015, as a permanent feature of our debt strategy.

The Finance Minister stated: “We will tie the policy firmly to counter-guarantees and standing orders from reputable banks.

We propose to extend the recovery to prices that MDA charge for use of debt financed projects. The use of these fees as IGFs without setting aside funds for maintenance and replacement is anomaly that must stop”.

Mr Terkper said the national budget was increasingly becoming inflexible to manage and to accommodate shocks and changes in government priorities.

These were mainly due to the earmarking of a huge component of the budgetary resources, he said, as statutory transfers in addition to existing statutory liabilities, such as wages and salaries, amortisation, and interest payments.

In the medium term, the government would propose measures to realign expenditures under the Statutory Funds hitherto being catered for under the Consolidated Fund, he said.

"Starting with the 2015 Budget and as a transitional arrangement, government will enhance the administrative process for aligning statutory fund expenditures to national policies and priorities," the Minister announced.?