Nigeria will not tap Eurobond due to cost implications ~Osinbajo
Nigeria’s Vice President, Yemi Osinbajo has said that the West African country is not considering the option of raising debt from the International Capital Market (ICM) in the immediate despite the huge budget deficits built into the 2020-2021 fiscal policy due to its cost implications.
Osinbajo, who spoke in Abuja said the country is trying to avoid commercial borrowing and would rather look to alternative ways to raise finance to plug the gap in its budget.
“We are not likely going to explore again the Eurobond market because we are trying to avoid commercial borrowing,” the Vice President stated.
Osinbajo said Nigeria is looking at World Bank loans and other concessionary facilities rather than tapping Eurobonds.
“All of us agreed that we must close the arbitrary gap but this is the function of the central bank,” Osinbajo said.
Nigeria’s economy has been hobbled as the coronavirus pandemic has triggered a crash in the price of oil, its main export, and an exodus of foreign investors from its debt and equity markets.
The country is projected to enter recession in the third quarter after the economy contracted 6.1 percent in the second quarter. The government expects the economy to shrink as much as 8.9 percent this year.
On Thursday, the government presented a record N13.08 trillion 2021 budget to parliament with N5.1 trillion deficit built into the spending estimate.
According to the budget details, the bulk of the deficit, about N4.3 trillion is expected to be borrowed from both domestic and external sources.
Nigeria is currently waiting on the World Bank for a $1.5 billion loans to plug this year’s budget deficit.