Nigeria’s President Muhammadu Buhari, on Tuesday, wrote the National Assembly for approval to borrow fresh $6.183bn (about N2.343tn) to fund the 2021 budget deficit of N5.602tn.
Entitled ‘Request for the Resolution of the National Assembly to the Implementation of the new External Borrowing of N2.343tn, which is about $6.183bn in the 2021 appropriation Act’ and addressed to the Speaker, Femi Gbajabiamila, Buhari explained that the fund would be sourced from multiple avenues, including multilateral and bilateral lenders, as well as the International Capital Market via issuance of Eurobonds.
The letter read: “From recent trends in the ICM, it is now possible for Nigeria to raise funds from there and this explains why we are proposing that the new external borrowing in the 2021 Appropriation Act should include issuing Eurobonds in the ICM.
“We estimate that Nigeria may be able to raise $3bn or more, but not more than $6.183bn (the amount provided in the 2021 Appropriation Act) in a combination of tenors between five and 30 years.”
Buhari said the outcome would be determined “when the nation approaches” the market, noting that “not only is the ICM now open to issuers like Nigeria and interest rates lower than the rate in 2020, given the recent monetary policy stance, as well as rising levels of inflation, the level of liquidity in the domestic market has decreased while domestic interest rates are beginning to rise.”
“Accessing the ICM will be relatively cheaper, thereby moderating debt service cost. It will also contribute to external reserves,” he said.
The $6.183bn would fund specific capital projects captured in the financial document, the President added.
Power, transportation, agriculture and rural development, education, health, counterpart funding for multilateral and bilateral projects, defence and water resources are to get priority attention.
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