By Charles Kumolu
ABUJA—The Debt Management Office, DMO, has said that the proposed $5.5 billion loan comprised $2.5 billion new borrowing and USD3 billion for refinancing, noting that the latter is purely a portfolio restructuring activity that would not result in any increase in the public debt.
The DMO in a statement yesterday, said the $2.5 billion new borrowing through Eurobonds to finance the deficit in the 2017 Appropriation Act and the refinancing of existing domestic debt through external capital raising of USD3 billion, were consistent with Nigeria’s Debt Management Strategy.
The DMO said: ”The proposed $2.5 billion new borrowing through Eurobonds to part finance the deficit in the 2017 Appropriation Act and the refinancing of existing domestic debt through external capital raising of $3 billion, are consistent with Nigeria’s Debt Management Strategy, whose main objective is the increase external financing with a view to rebalancing the public debt portfolio in favour of long-term external financing in order to reduce the cost of debt and lengthen the maturity profile. In contracting external debt, a conscious effort is made to exhaust all opportunities available from the concessional sources in order to reduce the level of External Debt Service.
”Furthermore, all Borrowings are approved by the National Assembly and are included in the Annual Budgets and the Medium Term Expenditure Framework (MTEF).
The first component of USD2.5 billion, represents new external borrowing provided for in the 2017 Appropriation Act to part finance the deficit in that Budget. It will be recalled that the 2017 Appropriation Act provided for new External Borrowing of N1.067 trillion or USD3.5 billion at an Exchange Rate of USD/N305. Out of this amount, USD300 million has been raised through a Diaspora Bond that was issued in June 2017 leaving a balance of USD3.2 billion out of which USD2.5 billion is to be sourced through a Eurobond Issuance.
The USD2.5 billion proposed Eurobond, will be used to finance critical road and rail projects included in the 2017 Appropriation represent foreign currency into the nation’s External Reserve thereby allowing for a stable exchange rate for the Naira.”