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…Embargoes foreign borrowing
From Juliana Taiwo-Obalonye, Abuja
Miffed by revelation from the Debt Management Office that it would use about $483.4 million to service its foreign debt over a 10-year period and make repayments from 2018 when Eurobonds begin to mature, the Federal Government Tuesday said it would suspend further offshore borrowing to focus more on growing its internally generated revenues.
Debt Management Office (DMO) in its annual report projects debt service repayments to amount to a total of $4.47 billion to be made in 2018, 2021 and 2023.
Nigeria issued a debut eurobond in 2011 with a follow up tranche in 2013. Between February and March the West African country issued $1.5 billion due in 2032.
The DMO report said Nigeria’s debut $500 million bond will mature in 2021, while a $1 billion will be due next year.
The government expects a budget deficit of 2.36 trillion naira this year as it tries to spend its way out of a recession. It expects to raise money to cover the gap from domestic and foreign sources.
But while speaking at the Quarterly Presidential Business Forum in Abuja, yesterday, Finance Minister Kemi Adeosun, said Nigeria may not borrow more to fund its N7.44 trillion budget but would instead raise money it needs by other means, raising question about its planned foreign loans of $2 billion from the World Bank and the African Development Bank
Nigeria’s economy which was hit by its first recession in 25 years, had planned to borrow extensively from overseas at concessional interest rate often not more than 2 per cent to fund a record N7.44trillion budget targeted at helping it out of recession.
But plans for lenders like the World Bank and African Development Bank to loan at least $2 billion to Nigeria have been stalled for over a year as international organisations’ frustrations mounted at the country’s refusal to implement key fiscal reforms including lifting foreign exchange curbs on its currency.
Finance Minister Kemi Adeosun’s comments, made while speaking at a business forum in the capital of Abuja, suggest that Nigeria will no longer seek such loans, or an additional $1.5 billion it had planned to raise from international debt markets.
According to her, government was already working to raise its tax revenue to about 15 per cent of GDP from 6 per cent at present
“We cannot borrow anymore, we just have to generate funds domestically enough to fund our budget. Mobilise revenue to fund the necessary budget increase,” she said.
In May, the head of Nigeria’s Budget Office said the country has a shortfall of $7.5 billion for its 2017 budget expenditure, and that would be addressed with $3.5 billion from the said loans and debt adding that government also planned to raise $4 billion from the local debt market.
The plan projects a deficit of 2.21 trillion naira, implying a deficit equivalent to 2.18 percent of Nigerian Gross Domestic Product.
