FG To Suspend Eurobonds Issuance, Other External Borrowings, Blames Debt Service Obligation

The Nigerian government is becoming cautious of borrowing externally to fund its budget deficit as cost of serving loans are getting more unfavorable.

Global trend of hiking interest rates to curb inflationary pressure may force the Debt management Office to concentrate its borrowings on the domestic market, the Director General of the Budget Office of the Federation, Ben Akabueze, revealed in a monitored interview on Channels TV.


But the government is even more cautious of Eurobonds which it has issued $5.25bn between 2021 and 2022.

“The deficits will be funded from borrowing and mostly domestic bowings. At this point in time, we have access to some foreign borrowing from multilateral and bilateral sources.

“The source of foreign borrowing that is clearly challenged is accessing the international capital market. And at this point in time, I don’t believe that the DMO has any plans to do so for now,” he said.

The European Central Bank on Thursday reviewed the regions key interest rates by 50 basis points, its first in 11 years.


In June, the United States inflation forced the US Fed to increase benchmark funds rate to a range of 1.5 per cent-1.75 per cent and is project to review it by another 50 basis points or 75 basis points in July.

Nigeria recently hiked its rate from 13 per cent to 14 per cent, the second time such increase is being made in 2022.

The Nigerian government is already indebted to the tune of $100.1bn (N41.6tn) and has spent as much as $2.3bn to service loans from January to June 2022.

Official data reveals Nigeria paid $694m (N288.64bn) to service external debts and $1.61m (N668.68bn).

Currently, Nigeria’s debt on issuance of the Eurobond and promissory notes is $16.52bn.


“The reality is those bonds issued in the domestic market doesn’t mean that only domestic investors buy into the bonds. That is one thing to note. So, we still have some external flows into the market to buy bonds.

“Beyond that, it does appear that the domestic market has the absorptive capacity. If you look at the balance sheet of the banks, it is not like there is a pressure on their balance sheet for funding,” he commented on the government crowding out local businesses.

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