They added the country’s appetite for Eurobonds, which come with high-interest rates and accompanying exchange rate risk, is especially concerning.
As of March 2022, Nigeria had a total of $15.918 billion in outstanding Eurobond debts, and that amount is still growing.
The nation had spent N898.6 billion in the first quarter of the year paying off both domestic and foreign loans. With a N6.26 trillion budget deficit and over N4 trillion still budgeted for fuel subsidy this year, the federal government plans to further increase its borrowings this year through Eurobonds.
Nigeria’s total debt stock is currently at N41.6 trillion as of the end of the first quarter of this year, an amount the International Monetary Fund projects to cross N46 trillion by the end of this year.
A breakdown of the $15.918 billion Eurobonds debts as obtained from the Debt Management Office (DMO) indicates as follows:
$500 million, July 2023 Eurobond raised at 7.625 percent: $1.118 billion November 2025 Eurobond, at 6.500 percent; $1.5 billion November 2027 Eurobond, at 6.125 percent; $1.25 billion September 2028 Eurobond, at 8.375 percent and $1.25 billion March 2029 Eurobond.
Others include the 7.143 percent $1.25 billion due by February 2030; Eurobonds $1.0 billion January 2031 at 8.747 percent interest yield; Eurobond, 7.875 percent; $1.5 billion FEB 2032 Eurobond, 7.375 percent; $1.5 billion September 2033 Eurobond, 7.696 percent; $1.25 billion February 2038 Eurobond, 7.625 percent; $1.5 billion November 2047 Eurobond, at 9.248 percent; $750 million January 2049 Eurobond and 8.25 percent $1.25 billion due by September 2051 Eurobond.
Concerns regarding the government’s appetite for borrowing, notably on the Eurobond market, were expressed by MPC members. In voicing his concern about the growing debt, Robert Asogwa, a member of the MPC, said, “What is particularly worrying about the debt structure is the increasing accumulation of Eurobonds in the external debt component, while decreasing concessionary loans.
“The government’s unexplained preference for Eurobonds at high-interest rates, along with the attendant exchange rate risk, may certainly harm Nigeria sooner than anticipated.
“The escalating fiscal sector deficits with the attendant rising debt ratios are part of the weak links in the domestic economic environment. The poor revenue growth in a period of expanding government expenditures has continued to soar the budget deficit levels in the first quarter of 2022, similar to the trend witnessed in 2021.
“Unfortunately, several other African countries are involved in this excessive rush for Eurobonds. Already, Nigeria is being mentioned by the IMF as one of the countries that may likely move into debt distress, given the staggering $100.07 billion dollars of public debt stock as of March 31, 2022.
Another member of the MPC, Professor Festus Adenikinju, a member of the MPC, it is important to curb the appetite of the government for debt.
“I am worried that Nigeria is not able to benefit maximally from the current upsides in the global oil market. We were not only unable to ramp up our production levels to meet the OPEC quota, but no accretion to foreign reserves is also taking place, and government deficit and public debts are going north at a time we should be writing down our debt profiles and even building up a buffer for the inevitable raining days ahead.”
He also raised concerns about government budgetary performance, saying “the rising share of governments in total credit to the economy by the banking system suggests crowding-out effects of private-sector borrowings. Governments should divert to non-debt means of funding its activities.”
