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Public Debt Management in Nigeria: The Impacts of Institutional changes after exiting from the Paris Club in 2006

Fagge, Muhammad and Ibrahim, Taofik (2018): Public Debt Management in Nigeria: The Impacts of Institutional changes after exiting from the Paris Club in 2006. Published in: Islamic University Multidisciplinary Journal (IUMJ) , Vol. 5, No. 2 (10 December 2018): pp. 52-62.

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This study evaluated the role of institutions in the management of public debt in Nigeria after the exit from the Paris club in 2006. It utilized both the institutional and macroeconometric frameworks. The institutional framework was anchored on the Debt Management Office Act of 2003 and the Fiscal Responsibility Act 2007 in which the two Acts of Parliaments provided a rule-based management of the public debt. Thus, the institutional analysis determined if the transition from discretionary to a rule-based system had taken place while the macroeconometric framework account for the impacts of debt on the public sector financing of Nigeria. The study found that the country has not been able to transit from the discretionary to a rule-based fiscal system/operation since the exit from the Paris club. This is can be attributed to the non-strict adherence to the rules as contained in the Fiscal Responsibility Act of 2007. The constraints to institutional change may also be linked to the conflicting interests/ asymmetrical relationship between the Debt Management office (DMO) and Fiscal Responsibility Commission (FRC) thereby limiting the abilities of the DMO to discharge their mandates. As a result, public debt stock and public debt service has grown significantly after the exit from the Paris Club. Therefore, this study recommends that the government should strictly comply with the provisions of Section 42 of the 1999 Constitution of the Federal Republic of Nigeria on borrowing as is contained in the guidelines of DMO Act and FRA.

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