Financial experts task FG, states on proceeds from bonds

Date:

500 and 1000 naira bills (Nigerian currency)Some financial experts on Monday in Abuja advised Federal and State Governments to ensure that proceeds from bonds were expended on projects that compelled the borrowing.

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The financial experts told Naija247news.com  at separate interviews that the bonds market was providing the liquidity that government needed to bridge the infrastructure deficit.

NAN reports that the bonds are securities issued under the authority of Debt Management Office.

The government has an obligation to pay the bondholder the principal and agreed interest as they fall due.

Mr Sylvester Ambrose, the Managing Director, Pay-Cash Bureau- De- Change, said “when you buy FGN bonds, you are lending to the Federal Government for a specified period of time’’.

According to him, the Federal Government bond is considered as the safest of all investment instruments in domestic securities market.

“That is so because it is backed by the ‘full faith and credit’ of the government’’.

Mr Atte Kura, a fund manager, said bonds had assisted the government to meet up with it numerous deficit spending since 2003.

“Nevertheless, government must ensure it approaches the market with caution and at minimal rate because those instruments are cash owned by private depositors.

“The other aspect is that frequent bond borrowing is an outright stockpile of debts for next generations and that halts the economy badly,’’ he said.

Mrs Angela Dike, an independent stock broker, however, said that the authorities at both the federal and the state levels had not been frugal with proceeds from bonds.

She explained that “special purpose FGN bonds are bonds issued to meet specific needs of the Federal Government and not meant to be diverted as often the case’’.

“The economy can be made stronger if government officials embraced financial discipline and adhere to the Procurement Act,’’ Dike said.

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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