Nigeria rules out Eurobonds sale, insists on domestic borrowing to fund 2019 budget

The Debt Management Office (DMO) has disclosed that the Nigerian government will not consider going to the international debt market this year to borrow fresh funds.

Director-General of the DMO, Ms Patience Oniha, who made this disclosure, stated that federal government will only consider the local debt market to seek for fresh funds.

In a correspondence with Bloomberg, Ms Oniha said, “We will only raise the new domestic borrowing of N802.82 billion as provided in the 2019 appropriation act. We won’t be in the international capital market in 2019.

Recall that in 2016, Nigeria approved a three-year plan to borrow more money from the international market and in 2018, the country issued a record $10.7 billion of international bonds.

Some investors had expected the Africa’s largest economy, which went into recession in 2016 and exited a year later, to sell more papers in 2019 to cover the N2.5 trillion budget deficit.

But Ms Oniha has dashed their hopes with her response to Bloomberg’s inquiry. She said federal government would stick to its new domestic borrowing plan to raise N802.8 billion this year.

Eurobonds worth $10.87 billion as of June 2019 accounted for the largest percentage of the nation’s external debt, rising from $8.5 billion at the end of June 2018, according to data sourced from the debt office.

The office had earlier this year refuted claims that the Federal Government had no plans to issue Eurobonds as part of its external borrowing this year.

It noted that the 2019 Appropriation Act provided for new external borrowing of N824.82 billon (equivalent of $2.7 billion at USD/N305), adding that the plan for raising the new external borrowing was to first access cheaper funds from multilateral and bilateral lenders as might be available.

“Thereafter, any balance will be raised from commercial sources, which may include securities issuance such as Eurobonds in the international capital market,” it disclosed.

Ms Oniha said that with the country’s 2019 Budget left with only six months for implementation as a result of the late passage of the bill, the government aimed to start its budget implementation for 2020 in January.