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Business News of Tuesday, 28 December 2021


Nigeria won’t return to Eurobond market –DMO

Debt Management Office (DMO) has assured that Nigeria will not be returning to the Eurobond market Debt Management Office (DMO) has assured that Nigeria will not be returning to the Eurobond market

The Debt Management Office (DMO) has assured that Nigeria will not be returning to the Eurobond market currently in a south mode.

The Director General, DMO, Patience Oniha, stated this during a virtual interactive session tagged “Nigeria Moving Beyond COVID-19; Opportunities for Investors organised by Coronation Merchant Bank (MB) in Lagos recently.

Oniha said Nigeria was still within the coronavirus pandemic dispensation and with the recently released Medium Term Expenditure Framework (MTEF), there are still a high level of government’s expenditure and borrowings because the deficits remain high.

She revealed that the government ran a deficit of N4.6 trillion in 2020 with current one at N5 trillion.

According to her, Nigeria’s public debt is low but one has to service debt from revenue which means that revenue is absolutely the key to sustaining the country’s debt.

Oniha said, “The DMO is very much in support of increasing the level of revenues. If we grow revenues, then debt service will be lower and debt will be sustainable but it also means that we may not need to borrow that much.

The second point in which we have put forward to the government is that it cannot finance the projects like it used to. Our position on debt sustainability is to grow revenues and begin to work with the private sector to finance capital projects and that way, the only thing that might increase is the off-balance sheet liabilities in terms of guarantees and not on-balance sheet borrowing”.

Asked whether the country will return to the Eurobond market after previous successful issuances, Oniha said, “We had $6.18 billion to raise for the 2021 budget but our transaction advisers told us to do $4 billion which was a decent amount to issue.

We were looking to go back at some point but within one week of pricing, the market headed south and is still in that situation right now. Omicron came, Evergrand had some challenges in the market and so it is not exactly good for us to go back and I can say for this year, we are not approaching the market. But if we do not get the money from the International Capital Market, we can get it from another source”.

The DMO boss expressed excitement on some of the targets already achieved, adding that government has not been static with its reforms.

“We are not achieving some of the targets we expected, but we have done well in certain areas. Our external reserves were affected by the challenges of last year owing to the collapse of the crude oil market. Looking at 2018 and 2021, the spikes in the external reserves came from large volumes of Eurobonds transactions and so when we are borrowing to finance the government and making FX available, it is clear that we are doing our best. Looking at December 2021, we raised $4 billion in Eurobonds in September and in 2018, we raised about $4.5 billion and so the borrowings are not be used for financing debt but support external reserves. I think we are good and our external reserves can service 8 months of imports. I also want to state that the government is not static in its reforms and if we continue in implementing these reforms before 2023 and after 2024, if we remain consistent, certainly, the growth target and the Nigeria that we all expect to see will emerge”, Oniha said.