The federal government will raise about $3 billion selling Eurobonds in the second week of October, Minister of Finance, Zainab Ahmed has said.
The government is now working to reduce its debt-service burden by increasing revenue, restructuring its debt portfolio through the conversion of expensive short-term notes into longer tenors and also reducing its overall borrowing, Ahmed said. “Our target is to triple revenues from about eight per cent of GDP to 15 per cent, and also grow the economy by seven per cent,” she said.
Proceeds from the sale — the first international sale since 2018 — will help the oil-dependent economy finance projects planned in the 2021 budget and shore up its foreign-exchange reserves, which has come under pressure from lower oil prices and production. The government expects a 2021 budget deficit of N5.60 trillion to be financed largely from foreign and local borrowings.
Expenditure plans have been prepared for a worst case scenario of oil prices falling to as low as $40 a barrel next year, Ahmed said.
Nigeria’s economy rebounded strongly in June, expanding 5.01 per cent, the fastest pace in seven years, from a contraction of 6. per cent the previous year as the easing of coronavirus restrictions allowed economic activity to pick up in the West African nation. Read more from the interview on inflation: “We certainly feel we have past the worst of it. Our projection is that inflation will continue to go down throughout 2021 and also 2022. Target is to get to single digit inflation by 2023.” On oil prices: “There is an indication that the market will still squeeze a little bit more. We have been lucky so far that prices have been trending upwards but anticipate that prices will go down. So we are prepared for the worse. We hope that it does not go below $40 a barrel.”
