DMO: FG has not Foreclosed Foreign Loans, Eurobond Issuance to Fund 2019 Budget

Ndubuisi Francis in Abuja
Contrary to media reports, the Debt Management Office (DMO) declared Wednesday that the federal government has not foreclosed the possibility of issuing Eurobonds as part of its external borrowing plan for 2019.
The 2019 Budget with a deficit of N1.92 trillion is to be financed mainly by borrowing N1.6 trillion, comprising N802.82 billion domestic and N802.82 billion foreign loans respectively.
The DMO said in a statement, issued in Abuja, that it was refuting media reports on June 19, 2019 to the effect that the federal government has no plans to issue Eurobonds as part of its external borrowing window in 2019.
According to the DMO, “The misrepresentation appears to have arisen during the Islamic Finance News Nigeria forum which held in Lagos on June 18, 2019, where the Director-General responded to a question on whether the federal government will issue a U.S. dollar-denominated Sukuk in 2019 which she stated was unlikely given the processes involved in the Sukuk issuance.”
The debt management agency noted that for the records, the 2019 Appropriation Act provides for New External Borrowing of N824.82 billion (equivalent of USD2.7 billion at USD/N305).
The DMO stated that the federsl government plans to go for cheaper foreign loans to help it part-fund the 2019 Budget while exploring the issuance of  Eurobonds, if necessary, to cover any shortfall.
“Consistent with the Debt Management Strategy of reducing debt service cost, the plan for raising the new external borrowing is to first access cheaper funding from multilateral and bilateral lenders as may be available.
“Thereafter, any balance will be raised from commercial sources which may include securities issuance such as Eurobonds in the international capital market,” the DMO said.
It reaffirmed its determination to continue focusing on its objective of reducing debt service costs by emphasising borrowing from concessional sources while considering Eurobonds and other commercial sources as secondary options.