It is now going to be tougher for states of the federation to enjoy easy access to borrowed funds, the Debt Management Office has said.
The Director-General, DMO, Patience Oniha, said this when the Edo State Governor, Mr. Godwin Obaseki, visited her in Abuja on Thursday.
Oniha said with dwindling allocations going to the states from the Federation Accounts on monthly basis, it was no longer reasonable for the states to use monthly allocations as guarantee to borrow and ask that the loans should be deducted at source.
This, the DMO boss said, called for strategic fiscal planning and implementation at the subnational level of government as both foreign and local loans were drying up.
Oniha said despite the campaign towards diversification, oil was still playing the dominant role in the nation’s revenue generation as she described diversification as a journey.
She said the states must now be strategic in addressing their already bloated debt stocks as well as in their quest to generate sufficient revenues to run their programmes.
The DMO boss said, “Previously, we could rely on funds from the Federation Accounts Allocation Committee; and in addition to that, we could borrow both at the federal and at the state levels, because there wasn’t a challenge. I think the times have changed. Revenues are under severe pressures. We are still dependent on oil revenues; non-oil revenues are picking up but that is still a journey.
“So it means now and in the future, we need to do things so much differently. We must be more strategic in the management of public finance. The language I always used in my previous work when I was at the Efficiency Unit was that it’s no longer business as usual.
“We can’t collect money from FAAC, borrow, continue and wait until the next month. So, at various levels, we need to be more strategic and more creative in the things that we do. That is why we at the federal level have initiated several measures to increase non-oil revenue and also control costs. I am aware that states like Edo have embarked on a number of initiatives. That is commendable.”