federal government has said it is not seeking any debt relief from its creditors despite the widely reported calls for debt relief for middle and low-income countries currently experiencing capital flight and unsustainable debt burdens.
Director General of the Debt Management Office (DMO), Ms Patience Oniha, made the disclosure while speaking at an online Investors Conference with Federal Government of Nigeria by CitiBank, titled “Covid-19: Economic and Budgetary Update.”
Nigeria was represented by Finance Minister, Mrs Zainab Ahmed; Central Bank Governor, Mr Godwin Emefiele; and DG Budget Office, Mr Ben Akabueze.
Responding to a question about the possibilities of Nigeria selling new Eurobond issues this year Oniha said: “Nigeria is not looking to getting a relief from its creditors whether commercial or bilateral.”
She explained that the focus remains to borrow from the domestic market and from concessional sources like World Bank and IMF.
She also cited the low-interest-rate environment as a major incentive for borrowing locally.
Oniha said: “When we saw where the market was based on the challenges we needed to address in terms of Covid-19, we planned the borrowing to be domestic and then external from concessional sources. We did not include the plan for this year to access the international market. We did not know how long this will last, what the cost will be and all the countries that came to the market were all investment-grade so we did not want to take a chance.”
She however did not rule it out. “Not for this year but certainly to go back to that market (Eurobond Market) we have to see where the levels are. Remember that I said borrowing in the domestic is cheaper than borrowing in the international market.
Having said that, I haven’t seen any country in the B- rating in the market at this time” she added. Nigeria obtained a $3.4 billion Rapid Instrument Loan from IMF last August as the impact of the Covid-19 pandemic ravaged the economy.
Also speaking at the conference, finance minister hinted that Nigeria is close to securing a loan of $1.5 billion and another $1-1.5 billion for federal government and states respectively.
According to Ahmed, “World Bank negotiation is on course and we are looking at the World Bank going to the board on 6th of August for Nigeria’s approval. They have met largely all the conditions for the facility.
She also confirmed the amount Nigeria is looking to raise from World Bank. “The amount we are raising in the first instance is $1.5 billion for FG and around September and October, we are hoping to close out on the facility meant for states and the amount is meant to be $1-1.5 billion.”
Federal government is planning to inject a bailout of N2.3 trillion into the economy, which it hopes to source from three sources as part of efforts to combat the effects of Covid-19 on the economy.