By Adedapo Adesanya
Nigeria is considering restructuring its debt and extending the repayment period of its credit obligations.
This was disclosed by the Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed, in an interview with Bloomberg TV.
She also revealed that the country has appointed consultants to advise the government on the proposed debt restructuring as it faces a rising debt-service burden, adding that the administration of President Muhammadu Buhari also plans to refinance domestic debt obligations that are due this year and 2023.
This will happen as the country’s N20 trillion in outstanding borrowings from the central bank will be bundled into government bonds.
“For the larger portfolio of debt, we have just appointed a consultant” to assess how the government can “get additional relief by way of restructuring and negotiating to stretch out the repayments to longer periods,” Mrs Ahmed said.
She, however, didn’t provide further details.
Africa’s largest economy faces a rising debt service burden that the World Bank estimates will hit 102 per cent of revenues this year.
President Buhari last week presented the largest budget of N20.51 trillion for next year, which has a deficit of over N12 trillion.
Members of the National Assembly approved the government’s plan to borrow as much as N8.4 trillion naira to plug part of the shortfall, an estimated N10.78 trillion or 4.8 per cent of gross domestic product.
“The budget is designed for us to raise financing 50 per cent from domestic and 50 per cent from the international financing, and this will be a combination of concessionary sources and bilateral sources as well as the international capital market,” Mrs Ahmed said.
She said Nigeria would only consider a Eurobond issuance if yields move to levels close to where they were when it last tapped international markets with a little markup.
Nigeria sold a seven-year bond in March at a yield of 8.375 per cent, far higher than a similar maturity it raised eight months earlier at 6.125 per cent. It later shelved plans to borrow another $950 million in May after yields on outstanding bonds spiked to mid-double digits.
“As it is right now, it’s too expensive for us to borrow from the international capital market,” Mrs Ahmed said.
Instead, the government will cut tax waivers and incentives given to companies and plan to introduce new excise duties or levies to ramp up revenues.
Mrs Ahmed expects that increased efforts to tackle crude theft, which has cut output to record lows, will produce results in the next three months.
“In the next one, two, three months, we should be able to hit the targets that we have in the budget, which is 1.6 million barrels a day,” she said.
Modupe Gbadeyanka