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FG to discount N1.5tr local
debts
By Sanya
Adejokun
Senior
Correspondent, Abuja
The Federal
Government is working out ways of reducing its N1.5 trillion debt to local
contractors. One of the strategies is to discount some of the debts and
then make them liquid trade instruments.
Director
General of the Debt Management Office (DMO), Dr. Mansur Mukhtar, told
journalists in Abuja at the weekend that some of the contractors have been
owed since the tenure of General Ibrahim Babangida and that some of the
debts would have to be re-verified and negotiated so as to secure
discounts.
�One
strategy is to identify some of the small creditors that could be paid
off. For the big creditors, we will try to negotiate so as to discount
some of the debts and then to issue securitised instruments so that they
become liquid trade instruments,� he added.
He said
government was considering this option so that each contractor holding the
instrument would be certain when his money was going to be paid and that
government itself would be able to make adequate planning based on
availability of resource.
�This would
be done so that the maturities of the securities could matched with
resource availability and given the amount involved, we could be talking
of tenures of five years upward�, he explained.
The DMO
chief said government decided to resolve the matter so that the private
sector could continue to repose confidence in government more so, as banks
have been complaining that enormous amount of their capital was being tied
to the debts.
�We feel we
have to resolve this in order to restore confidence of the private sector
in government that you would work and get paid. Two, it is also important
in order to re-build the financial risk in the economy. We know that a lot
of money was taken from the banking system and is causing a serious
problem for the banks in terms of the qualities of their
portfolios.
�We also know that we have to
get this settled quickly because many of these businesses, especially the
construction firms also employ much labour and they drive the growth
processes and linkages in other parts of the economy. So we want to make
sure that they continue to operate. Instead of folding up to continue to
recruit people,� he said.
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