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Nigeria plans new borrowing via Eurobond in June

Published

10 months ago

March 14, 2024

Following a two-year hiatus, Nigeria is returning to the international bond market with the first Eurobond issue since 2022. The nation issued $1.25 billion worth of Eurobonds in March 2022.

For guidance on its upcoming Eurobond issuance, the Nigerian government has enlisted the services of top international investment banks, such as Citibank NA, JPMorgan Chase & Co., and Goldman Sachs Group Inc. Additionally, it hired Chapel Hill Denham, a financial advisory firm based in Lagos, and Standard Chartered Bank to provide consultation on this project.

According to Bloomberg and sources familiar with the deal, this development highlights Africa’s top oil-producing country’s intention to re-engage with international financial markets in order to support its fiscal budget.

The report mentioned that the size of the Eurobond offer, which is anticipated before June, has not yet been decided. The individuals requesting anonymity stated that they were not authorized to make public comments on the subject. It went on to say that the country might try to get up to $1 billion in foreign loans by the year 2024.

Nigeria needs this outside funding in order to finance a significant budget deficit, as indicated by President Bola Tinubu’s N28.8 trillion ($18 billion) spending plan for 2024, which aims to create a fiscal shortfall of N9.8 trillion, or 3.8% of GDP. It is anticipated that global financial institutions and local and international borrowing will help close the deficit.

In December of last year, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made a suggestion that the country might consider issuing Eurobonds later this year if the rates were significantly lower. He said that major issuers had already informed Nigeria of the possibility.

He noted, “It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms.”

President Tinubu has actively pursued measures to revive foreign investment inflows into Nigeria since taking office in May 2023. These measures include the contentious removal of fuel subsidies, reducing the gap between the Central Bank’s policy rate and the yields on government securities, and carrying out two naira devaluations to promote a more flexible exchange rate regime.

In a related development, the Debt Management Office’s most recent circular states that the government intends to borrow N450 billion from its third FGN bond auction in 2024. Compared to the N2.5 trillion target from the same bond auction the previous month, this amount is 82% lower.

Related Topics:Debt Management Eurobond Featured Nigeria

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IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

1 day ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

VenturesNow

Libya’s eastern govt accepts petrol subsidy elimination

Published

1 day ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.