Sub-national Debt Management Study Tour

From June 9 to 15, 2004, as part of the Forum’s on-going cooperation with the Nigerian Debt Management Office’s initiative on sub-national debt management, the Forum facilitated a study tour in Brazil for Nigerian finance officials. A total of 13 senior-level officials from Nigeria, most of them State Finance Ministers, participated in the tour. Different issues related to sub-national debt management were discussed with the National Treasury Secretariat of the Ministry of Finance, the Accounts Tribunal and the Institute of Applied Economic Research in Brasilia, as well as with the Secretariat of Finance of the State of Bahia in Salvador.

The overall objective of the study tour was to expose officials drawn from Nigeria’s Debt Management Office, Office of the Accountant General of the Federation, and other relevant stakeholders who have responsibility for domestic borrowing in Nigeria as it relates to sub-national debt to counterparts in Brazil. The specific objectives included:

  1. Reviewing legal frameworks pertaining to sub-national borrowing and assessing the relevance of such framework to the Nigerian situation.
  2. Analyzing the economic, financial and political relationships between central government of Brazil and their provinces and municipal governments.
  3. Reviewing the mode and availability of access to credit by sub-national entities in Brazil and any control frameworks surrounding such activity. Some specific issues included: the borrowing powers and procedures regarding powers to issue debt; restrictions or otherwise, on the types of debt that may be issued; controls over the amount and uses of debt; mechanisms for handling issues relating to financial distress and/or insolvencies by sub-nationals; the state of the Brazilian bond market; and sharing among national counterparts, ideas and approaches to sub-national debt issues, both from the perspective of the central government as well as with representatives of sub-national governments.

Given the similarities between Brazil and Nigeria in terms of their federal structure and namely the challenges as they relate to indebtedness of sub-national governments and the possible ways of tackling these problems, the study tour proved to be very useful. Also, given that fiscal federalism is a priority in both Brazil and Nigeria programs, making a link between the two and facilitating the exchange of experiences and providing networking opportunities is certainly justified.

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