Nigeria Economy | |
Nigeria Economy | |
982 VIEWS | |
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Thursday,
April 16, 2020 / 09:03 AM / by FBNQuest Research / Header Image Credit: Ecographics
Total
debt service on the FGN's external obligations amounted to US$1.33bn in 2019
including US$250m in the fourth quarter. (Payments were considerably higher the
previous year because the FGN declined to refinance a sovereign Eurobond that
matured in Q3 2018.) In normal times, however defined, this burden should not
be overly onerous for a country managing crude oil production of +/- 2.0mbpd.
This comfortable narrative is currently under threat from the crashing oil
price and coronavirus pandemic.
Based
upon annual interest and fee payments in the 12 months to December and the
stock of debt as at end-June, we calculate the average borrowing cost from the
World Bank Group at 0.9%, the African Development Bank Group at 2.3% and Exim
Bank of China at 2.7%. For the FGN's commercial obligations, the average works
out at 7.1%.
The
quarter was light in principal repayments, which amounted to US$40m.
On
Tuesday G7 finance ministers and central bank governors supported a "time-bound
suspension on debt service payments due on official bilateral claims for
all countries eligible for World Bank concessional financing". Nigeria
would appear to qualify because it borrows from the Bank's soft window (the
International Development Association).
Nigeria's
bilateral debt service was not crushing last year (US$170m).
Total external debt service (FGN and
states; US$ millions) |
|
Sources:
Debt Management Office (DMO); FBNQuest Capital Research |
G7's
support is conditional upon the agreement of G20, and there are hopes of a
sign-off at the Fund/Bank spring meetings this week. However, G20 is said to
feel that it should ask "private creditors to provide comparable treatment, on
a voluntary basis". The FGN would like to maintain its access to the Eurobond
market and may feel uncomfortable with such a request.
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