We Don’t Foresee Any Debt Stress From FG’s $15.9bn Eurobond—AFC

The Africa Finance Corporation (AFC) has projected that in the year 2023 the Federal Government will not experience any debt stress on its Eurobond.

As of March 2022, Nigeria currently has a total of $15.918bn outstanding Eurobonds debt and it continues to accumulate more.

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However, the Chief Economist AFC, Rita Nsanze revealed during the National Pension Commission outlook seminar via zoom that despite the inaccessibility of the Eurobond, its will be easy to retrieve back the bonds issued.

Nsanze also said that government’s interest payments as a share of revenue have doubled which will give the fiscal year under review and 2024 a fiscal space in the external the economy.

She said “Given that the majority of Nigeria’s external debt is multilateral based lending (47 per cent of total stock) we do not foresee high levels of debt stress from its Eurobond repayments in the near term.

“Eurobond markets however remain inaccessible to Nigeria for its financing needs given its current sovereign spreads and credit rating.

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“Also, government interest payments as a share of revenue have more than doubled from 19.7 per cent in 2018 to the current 48 per cent. But low amortization requirements for 2023 and 2024 offer Nigeria some breathing space on the external front.”

Nsanze also revealed that if no necessary solution is put structurally to curb the current account position of the country, liquidity in the foreign exchange will be massive in 2023.

“The improving current account position will also provide some relief with respect to near term external financing needs, however without the necessary structural reforms, we expect FX liquidity pressure to persist in 2023 and potentially 2024 on the back of increasing downward pressure on foreign reserves,” she added.

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