Uche Usim, Abuja
Twenty four after it foreclosed chances of borrowing from the international finance market, the Federal Government yesterday reaffirmed it may still leverage the Eurobond window to fund its 2019 capital budget if becomes necessary.
The Debt Management Office clarification came after its boss Ms Patience Oniha, said on Wednesday, no such plan was being considered.
Foreign borrowing for the 2019 budget was set at N824.82 billion naira ($2.7 billion) and the plan is to first access any cheaper funding from multilateral and bilateral lenders. “Thereafter, any balance will be raised from commercial sources which may include security issuance such as Eurobonds,” DMO said in a statement on Wednesday.
Nigeria, which emerged from recession last year, has borrowed abroad and at home over the past three years to help finance its budgets and to fund infrastructure projects, but debt servicing costs have been rising.
On Tuesday, Oniha told an Islamic Finance conference in Lagos that there were no plans to issue Eurobonds this year.
Following media reports insinuating that the Federal Government has no plans to issue Eurobonds as part of its external borrowing in 2019, the Debt Management Office (DMO) on Wednesday clarified that there was no such foreclosure.
But according to a statement from DMO, the misrepresentation appears to have arisen during the Islamic Finance news conference in Lagos on June 18, 2019, where the Director-General responded to a question on whether the Federal Government will issue a US dollar denominated Sukuk in 2019 which she stated was unlikely given the processes involved in the Sukuk issuance.
The statement read in part “For the records, the 2019 Appropriation Act provides for New External Borrowing of N824.82 billion (equivalent of USD2.7 billion 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 ommercial sources which may include securities issuance such as Eurobonds in the International Capital Market, (ICM).
“The DMO wishes to reiterate that it will 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”, the statement read.