BUSI­NESS FG to re­fi­nance $3bn lo­cal ‘5% ap­proval to ac­ci­dent loans with dol­lar debt bureau in best in­ter­est of avi­a­tion sec­tor’

Daily Trust - - NEWS -

Nigeria plans to re­fi­nance $3 bil­lion worth of ma­tur­ing naira-de­nom­i­nated short­term trea­sury bills with dol­lar bor­row­ing of up to three years’ ma­tu­rity, to lower costs and im­prove its debt po­si­tion as the econ­omy re­cov­ers from a re­ces­sion.

Fi­nance Min­is­ter Kemi Adeo­sun said on Wed­nes­day she was aim­ing to bor­row less in naira and more in for­eign cur­rency. She said the govern­ment could bor­row at a cost of 7 per­cent over­seas, roughly half the in­ter­est rate it cur­rently pays lo­cally.

“As the econ­omy re­cov­ers and grows we will be in a much bet­ter po­si­tion to re­pay in­stead of just rolling over the debt,” she told re­porters af­ter a cabi­net meet­ing where the govern­ment ap­proved a spend­ing plan for 2018-2020.

Dol­lars have been in short sup­ply in Nigeria since the price of crude oil, the main source of hard cur­rency, plunged in mid2014, trig­ger­ing a cur­rency cri­sis, an ex­o­dus of for­eign in­vestors and its first re­ces­sion in 25-years.

The govern­ment ex­pects the econ­omy to re­cover this year and grow by 2.2 per­cent. The In­ter­na­tional Mon­e­tary Fund sees just 0.8 per­cent growth.

Adeo­sun said the govern­ment was aim­ing to re­struc­ture its debt port­fo­lio into longer term ma­tu­ri­ties by bor­row­ing more off­shore and less at home to lower cost and also sup­port pri­vate sec­tor ac­cess to credit to boost the econ­omy.

Adeo­sun said the govern­ment would is­sue dol­lar debt as $3 bil­lion worth of naira trea­sury bills ma­ture. She did not pro­vide a time­frame for this.

Nigeria ex­pects a short­fall of $7.5 bil­lion for its 2017 bud­get. It ex­pects to raise around half of that in for­eign loans in­clud­ing from the World Bank and from in­ter­na­tional debt mar­kets.

“We are not in­creas­ing our bor­row­ings. We are sim­ply re­struc­tur­ing. In­stead of ow­ing naira, we will be ow­ing dol­lars,” Adeo­sun said.

At the brief­ing, Udoma Udo Udoma, min­is­ter for bud­get and na­tional plan­ing said the govern­ment had ap­proved “a slightly dif­fer­ent” growth tra­jec­tory of 3.5 per­cent for next year, down from 4.8 per­cent it an­nounced last week in its strat­egy pa­per.

Udoma fore­cast growth would top 4.5 per­cent by 2019 and 7 per­cent by 2020, adding that the govern­ment was pro­ject­ing 2.3 mil­lion bar­rels per day crude pro­duc­tion for next year at a price of $45 a barrel.

He said the govern­ment was com­mit­ted to ex­plor­ing ways of rais­ing ad­di­tional rev­enues to lower the debt ser­vice bur­den. FLIGHT



Min­is­ter of Fi­nance, Kemi Adeo­sun ARIK AIR

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