| Nigeria Economy |    647 VIEWS  |
| Nigeria Economy | |
| 647 VIEWS | |
 | |
| PROSHARE | |
| PROSHARE | |
Tuesday, September 15,
2020 / 10:20 AM / by FBNQuest Research / Header Image
Credit: Ecographics
The
FGN's external debt obligations increased by US$3.8bn in Q2 2020 to US$31.5bn.
We see from the DMO's data release that the driver was the disbursement of
US$3.4bn by the IMF within its rapid financing instrument (RFI) to tackle
external shocks such as Covid-19. (The RFI is free of policy conditionality,
which explains why it is available to all members other than those in arrears
to the Fund such as Zimbabwe.) There were also increases of US$360m and US$120m
in net obligations over the quarter to the World Bank group and Exim Bank of
China.
In the absence of new commercial borrowing, the share of the external
debt stock that is due to multilateral and bilateral creditors, principally the
World Bank Group, on concessionary terms has again risen. The ratio rose from
59.6% in Q1 2020 to 64.5%.
The budget projects external borrowing of US$5.5bn. Beyond the RFI and
US$290m approved by the African Development Bank (AfDB) group out of US$500m
requested, it hopes to navigate its way around conditionality, led by fx
policy, and secure multilateral loans from the World Bank and
others.
The FGN has pledged not to tap the Eurobond market this year. We hope
that it will refinance a Eurobond maturity in January with a new issue. It did
not accept the G20 offer of bilateral debt relief and did not ask private
creditors for comparable treatment. That way, it protected its market standing.
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FGN external debt by lender group,
Jun 2020 (% shares)
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Sources:
Debt Management Office (DMO); FBNQuest Capital Research |
The DMO has started to share data covering external loans approved but
not yet disbursed. The total from Exim Bank of China is US$1.26bn and JPY2.3bn
including one for rice processing plants signed as long ago as April 2016.
A note put out by S&P in June informs us that Nigeria had the fifth
highest stock of public external debt in Africa at end-2019. Egypt topped the
table with over US$60bn, with Angola, Kenya and Ethiopia all ahead of Nigeria.
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