Nigeria Economy | |
Nigeria Economy | |
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Tuesday, July
14, 2020 / 09:50 AM / by FBNQuest Research / Header Image Credit: Global Finance Magazine
We
see from the DMO's most recent quarterly release that the FGN's external debt
obligations at end-March amounted to US$27.67bn, equivalent to 6.9% of 2019
GDP. (We convert at the then prevailing NAFEX rate.) The total was broadly flat
on the quarter. Commercial borrowings were again US$11.17bn because the FGN has
not issued Eurobonds since November 2018. It has pledged not to do so in the
current budget year. The crashing of rates on naira debt instruments has
weakened the case for externalization (deploying Eurobond proceeds to pay down
NTBs).
In terms of financing costs, we note that 59.6% of the external debt
stock is due to multilateral and bilateral creditors, principally the World
Bank Group, on concessionary terms. The ratio was little different at
end-December (59.7%). It will have increased sharply in Q2 following the
disbursement of US$3.4bn by the IMF within its rapid financing instrument.
Within the 2020 budget the FGN projects external borrowing of US$5.5bn.
Beyond the loan from the Fund and US$290m approved by the African Development
Bank (AfDB) out of US$500m requested, it hopes to secure multilateral loans
from the World Bank and others.
The Exim Bank of China has become a larger donor creditor than the AfDB
Group: US$3.12bn vs US$2.27bn. New Chinese-funded projects are on the drawing
board, not least for the railways.
FGN external debt by lender group,
Sep 2019 (% shares) |
|
Sources:
Debt Management Office (DMO); FBNQuest Capital Research |
The DMO has started to share data covering external loans approved but
not yet disbursed, and those disbursed in part. For the first category, we find
a total of US$1.26bn and JPY2.3bn for Exim Bank of China including one signed
as long ago as April 2016. For the second, there are no fewer than 47 separate
loans from the World Bank's International Development Association that have
been partly released. The amount undisbursed (US$4.48bn) would represent
disbursed 16% of the FGN's external debt stock.
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