Nigeria Plans to Refinance Debt and Seek New Funding

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has said Nigeria is looking to refinance some of its costly debts and find new funding to cover its budget shortfall. This move comes as better market conditions are boosting investor confidence in Nigeria.

Mr Oyedele shared this information during an interview with Bloomberg TV.

He mentioned that the federal government wants to take advantage of the current market situation to restructure its expensive past debts and secure funding for development projects. "We think that this timing is good for us to be able to maybe even refinance some of our expensive past debts, but also to raise more funding for our development at this critical time. You don’t know what happens tomorrow. But as of today, market conditions are actually very good," he said.

His comments come as crude oil prices have risen due to tensions in the Middle East. This situation has improved the outlook for oil-producing countries like Nigeria.

Higher oil prices have also strengthened Nigeria’s external earnings and boosted investor confidence in the country's creditworthiness. The extra amount investors demand to hold Nigerian dollar-denominated bonds compared to United States Treasury securities has dropped significantly, showing growing confidence in Nigeria's economy.

Despite the rise in government revenue, Mr Oyedele revealed that Nigeria is still facing a budget deficit of about N30 trillion this year. This makes it essential to find additional funding.

He added that the government is exploring various financing options, including concessional loans from international institutions. "We’re keeping our options open. We know the size of the deficit, including less-costly concessionary loans," he said.

He mentioned that talks are ongoing with the World Bank and other development finance institutions. The reforms introduced by the Bola Tinubu administration are also drawing investor interest.

Since May 2023, the government has made several reforms, including ending fuel subsidies, changing tax policies, altering foreign exchange rules, and taking steps to boost fiscal revenue.

Mr Oyedele pointed out that while rising oil prices have increased government earnings, they have also led to inflationary pressures around the world. This situation has made economic management even more difficult.