President Mohammadu Buhari
The Federal Government plans to raise $2.8 billion as part of its 2018 budget and will explore all options to lower costs.
Nigeria has laid out plans to borrow abroad even though interest rates are rising in the United States which could see the country pay a higher premium. The country experienced recession in 2016 and left 2017, approved a three-year plan in 2016 to borrow more from abroad so that 40 percent of its loans would come from offshore in an attempt to lower borrowing costs. It has around 23 percent of its debt up from 16 percent when it approved the plan.
The debt office has sent a request for a proposal to banks for an international bond offering. As senior government official, Patience Oniha said, “We will explore all options keeping in mind our twin objectives of extending the tenor of the debt stock and lowering costs.” Although she did not give details because Nigeria’s parliament needs to approve the new borrowing and it is believed that wrangling between the two arms of government may not give way easily for the executive.
Oniha in January said the DMO could tap capital markets or concessionary loans from the World Bank and would consider funding options after the 2018 budget had been approved.
President Muhammadu Buhari has signed a record 9.12 trillion naira budget for 2018 into law, aimed at fostering growth in Nigeria before elections in 2019.
Growth rates in Nigeria have bounced back since the third quarter of 2016, when the country was plunged into recession, its first in 25 years. It exited that contraction largely due to higher oil prices with the country relying on crude sales for much of its revenue.
However, growth slowed in the first quarter of 2018 for the first time since pulling out of recession as its non-oil sector struggled.
Also the country raised $2.5 billion through a dual-tranche Eurobond offering in February, selling a 12-year note at 7.1 percent to raise $1.25 billion and a 20-year tranche at 7.7 percent.