Written by Sarah NEGEDU

Nigeria to solicit $2.7bn foreign loan in 2019

Nigeria is looking to borrow $2.7billion from foreign sources including commercial sources such as Eurobonds, the Debt Management Office has disclosed.

The debt office, made this know while clarifying a report that claim the federal government had ruled out the issuance of Eurobonds in 2019.

It said the first priority would be to borrow from multilateral and bilateral sources, while the balance would be borrowed from commercial sources such as Eurobonds.

The agency said the plan to borrow $2.7billion from external sources was contained in the 2019 Appropriation Bill, which was recently signed into law.

According to the debt office, “For the records, the 2019 Appropriation Act provides for new external borrowing of N824.82billion (the equivalent of $2.7billion at USD/N305).

“Consistent with the Debt Management Strategy of reducing debt service cost, the plan for raising the new external borrowing is to first access cheaper funding from multilateral and bilateral lenders as may be available.

“Thereafter, any balance will be raised from commercial sources which may include securities issuance such as Eurobonds in the International Capital Market.”

DMO said it would continue to focus on its objective of reducing debt service costs by emphasising borrowing from concessional sources while considering Eurobonds and other commercial sources as secondary options.

From June 30, 2015, to December 31, 2018, Nigeria’s debt profile rose from N12.12trillion to N24.39trillion, reflecting a 101.23percent increase in 42 months.

Much of the debts belong to the Federal Government whose debt profile as of December 31, 2018, stood at N19.23trillion. On the other hand, the debt profile of the subnational governments – the 36 states of the federation and the Federal Capital Territory – stood at N5.15trillion.

This means that the 78.87 percent of the public total debt as of December 31, 2018, belongs to the Federal Government while the subnational governments had a proportion of 21.13 percent.

The external debt stock of both the states and the Federal Government rose from N2.03trillion as of June 2015 to N7.76trillion as of December 2018.

This means that the external debt of the country rose by N5 .73trillion. This reflects 282.27 percent increase in the country’s external debt profile.

Of the total public external debt profile as of December 2018, the Federal Government had a share of N6.47trillion or 83.38 percent while the states and the FCT had a share of N1.3trillion or 16.62 percent.

On the other hand, the Federal Government’s domestic debt commitment increased from N8.4trillion as of June 2015 to N12.77trillion. This shows a difference of N4.37trillion or an increase of 52.02 percent within the period under review.

The domestic debt of the subnational government increased from N1.69trillion as of June 2015 to N3.85trillion as of December 31, 2018. This shows an increase of N2.16trillion, reflecting 127.81percent increase within a period of three and a half years.

Overall, total domestic debt rose from N10 .09trillion as of June 30, 2015, to N16.63trillion as of December 31, 2018. This shows a difference of N 6.54 tn or an increase of 64.82 percent.

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