Some of the loans Nigeria is currently re-paying were obtained immediately after the nation attained independence in October, 1960, Dr. Abraham Nwankwo, director-general of the Debt Management Office (DMO) said yesterday.

Nwanwko spoke at the News Agency of Nigeria (NAN) Forum in Abuja. "Two major clarifications: After independence, Nigeria did borrow; Nigeria did borrow in the 60s. Indeed, if you go to our loan books now, which are available for public scrutiny, you find out that some of the loans we have in our books now were borrowed in 1965, 1970, in 1968," he said.

Nwankwo said the then central and regional governments took the loans to execute major projects. He said that it was on record that the loans were specifically used to "build major roads, monumental houses of assemblies in Kaduna, Enugu, as well as in Ibadan." Nwankwo further said the loans were used to establish many federal universities and other notable tertiary institutions.

According to him, most of the successful agricultural projects of the past were funded with borrowed moneys. He added, "We have the details of some of the moneys that were borrowed in 1960." The director-general said he was in custody of the record of the country's national development plans of the 60s and 70s in which the central and regional governments issued development loan stocks.

"Borrowing is not new to Nigeria and indeed, as I said earlier; borrowing is an integral part of a modern economy," he said. Nwankwo described the DMO as a permanent feature of every emerging economy because governments all over the world, no matter how developed, needed to borrow to fund major projects.

"In this way, you are in the position to fast-track development; this explains why even countries like United Kingdom, United States, France and Germany that are so well advanced still borrow domestically and externally," he said. He said more than 90 per cent of private companies worldwide could not function unless they borrowed, noting that it made sense for them to borrow to expand and enlarge their turnover.

According to him, it therefore, makes sense for government as an economic agent to borrow to accelerate growth and development. However, Nwankwo stressed that borrowed funds must be used judiciously to execute the project they were borrowed for. "We have to together ensure that the proceeds of borrowed funds are used in such a way that they generate maximum output, maximum growth, maximum employment, maximum poverty reduction," he said.

Nwankwo also spoke on the fiscal responsibility law, saying that it was enacted in 2007 to ensure that individual firms, public officials and organisations were held accountable for the way public resources were spent. He said that the law specifies procedures that would ensure that funds were expended only on items explicitly captured in the Appropriation Act.

According to him, the law also provides for individuals to have the liberty to seek the interpretation of the law in court when funds are not spent in line with the expenditure projection. Nwankwo further said the fiscal Act also emphasises the need for public sector borrowing to be controlled.

The director-general also put the nation's local and foreign debts at $29 billion. He added: "As at now externally, we are owing $4.27 billion -- as at the end of June 2010. Domestically, at the end of June 2010, Nigeria is owing N3.76 trillion.

"If you combine the two under one denominator in dollars, the total public debt as at the end of June 2010 is about $29 billion." Nwankwo said that 85 per cent of the external debt was from the concessionary window of the World Bank and the soft window of the African Development Bank (ADB).

"These are windows where the total finance charged of what you have borrowed is not more than 1.25 per cent per annum," he explained. The director-general further explained that loans from the concessionary window had longer re-payment periods.

NAN