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Creditors snub Nigeria for US, Japan, as govt struggles to borrow


The Director-General of the Debt Management Office (DMO), Patience Oniha, has disclosed that Nigeria is struggling to borrow money from international creditors due to its economic ratings.

DMO said foreign creditors prefer to invest their money in G-7 securities: United States, Germany, France, Japan, with high inflation rates and interest rates scaring them away from countries like Nigeria.

Nigeria’s struggle to raise funds from investors has been worsened by credit ratings firms, Moody’s and Fitch, after they downgraded the country to Category ‘B’ economy.

During her appearance at the House of Representatives to defend the DMO’s 2023 budget on Monday, Oniha told the Committee on Aids, Loans and Debt Management that Nigeria has an issue with the new external borrowings.

Oniha disclosed that in 2021, Nigeria raised $4 billion from foreign creditors, falling short of the $6 billion it planned to raise. She also stated that the country has only been able to borrow $1.25 billion.

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“Where there is an issue is the new external borrowings. What was provided for in the 2022 budget is N2.57tn of new external borrowings and this, in naira terms at the budget exchange rate, is $26bn.

Read also:DMO defends Nigerian govt’s borrowings to fund fuel subsidy

“The reality is that if it were before, by now we would have issued Eurobonds to raise the money and we would be in good business.

“But let us say from the fourth quarter of last year, the international capital markets have not been opened to countries like Nigeria. So, in 2021, there was about $6bn to raise. We raised $4bn for that one. But this year, it is $1.25bn.

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“The international markets are not looking for countries with our ratings –B ratings. The invasion of Ukraine by Russia, as you know, turned around things in the world significantly.

“So, inflation rates are high, interest rates are high and investors are saying there are a lot of uncertainties as to what will happen. There is a threat of recession.

“So, what they have decided to do is to put their money in the G-7 securities: United States, Germany, France, Japan, and so on. Those countries also issue bonds. So, that is where the investors are putting their money and rates have gone up significantly,” Oniha said.

The DMO boss also told the lawmakers that, “We really need to look at revenues. For debt to be sustainable medium term, you must earn revenues. We should not have a budget of N17tn and N10tn of deficit, and out of that (there is) new borrowing of N8.8tn, which is 50 per cent of your budget.”

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