FG to commit $500m eurobond to finance N4tn budget deficit, writes NASS

Acting President Yemi Osinbajo on Wednesday sought formal approval from the National Assembly to commit a $500million Eurobond for the financing of the country’s 2017 budget deficit estimated at N4.023trillion.
Hopes of bridging funding gaps in the 2017 budget were recently raised when a $1billion Eurobond issued by the Federal Government was oversubscribed.
In his letter to the House of Representatives, Osinbajo invited Speaker Yakubu Dogora “to refer to line items 229 and 244 of the 2016 Federal Government of Nigeria (FGN) Appropriation Act, which provided for a deficit of N2,204.742 billion and new borrowings of N1,818.675 billion respectively.”

“The Act”, he said, “also provided for Domestic Borrowing of N1,182.798 billion and external borrowing of N635.877 billion in line items 245 and 246 respectively.”

He, therefore, sought the support of the House “to take advantage of favourable market conditions to issue a eurobond debt instrument of USD 500 million to fund the implementation of the 2016 budget, which is still ongoing.”

Read also: 2017 BUDGET: Defaulting MDAs to get zero allocations, Senate threatens

“The Rt. Honourable Speaker may wish to note that in line with the requirement of securities issuances in the ICM, a specific resolution of the National Assembly, as a firm confirmation of the approval of the Legislature for the Federal Government of Nigeria (FGN) to borrow the USD 500 million through the issuance of a eurobond debt instrument in the ICM is required,” the Acting President informed the Parliament,” he added.

Osinbajo reassured that, “The debt management office and the Federal Government’s appointed Transaction parties to the issue are committed to working assiduously to secure the best terms and conditions for the Federal Republic of Nigeria.”

Once considered by the House, the Senate is also expected to give consent to the request.

Nigeria’s economic recovery plans are largely hinged on improved oil earnings which remain very volatile. The Buhari-led administration, however, says it is committed to restructuring the economy away from import-dependence which has put a lot of pressure on the country’s currency.

The government is also pursuing an aggressive agricultural reforms policy.

 

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