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Nigeria To Float $1bn Euro-bond, Increase Borrowing To $9.2bn

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FINANCE Minister and Co-ordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, on Monday sought approval of the National Assembly for a legislative backing for the floating of a $1 billion bond as well as another $100 million Diaspora bond.

Defending the 2012-2014 Medium Term Expenditure Framework before the House of Representatives’ Committee on Aids, Loans and Debt Management, the minister, who put the country’s total external debt at $6.2 billion as at the end of September, declared that all debts were meant to promote serious infrastructural development.

Okonjo-Iweala, announcing the amendments to the external borrowing plan as contained in the Medium Term Expenditure Plan, said: “We are proposing three amendments to this external borrowing plan: We have an amendment to add water supply project for Rivers State to the tune of $200 million. This will be supported through the ADB to be a concessional loan. Forty years of duration, 10 years of grace, 0.7 per cent change.

“We also propose to swap some of the existing loans in this plan to take them out and substitute in their place, a facility to kick-start housing mortgage finance in Nigeria. And we are thinking that this will be to the tune of about $300 million.

“And the final thing is to bring to the notice of the committee the plan that we have been developing all along for a Euro-bond of $1 billion. You will recall that during President Yar’Adua’s administration, plans were initiated for the first Euro-bond. Preparation started and it was successfully floated at the beginning of January 2011. It has been highly subscribed. It was 200 per cent over-subscribed. And this established a yield curve for Nigerians and thereby helped to be able to go and float Euro-bond themselves. So, this Euro-bond is a continuation. We just wanted to bring that to your attention that in addition to this borrowing plan, there is a plan for Euro-bond of a billion dollars.”

There is also a $100 million of a Diaspora bond to attract people in the Diaspora to bring their money back to invest in infrastructure. So those are the proposals we would want to put before you,” she added.

The minister also hinted that Nigeria’s total internal debt was N6.3 trillions at the end of September 2012.

She cautioned against politicising the disagreement between the Presidency and National Assembly on the oil benchmark issue.

According to her, in other countries, there exist committees of expert that decide the issue of benchmark.

And the Director-General of the Debt Management Office (DMO), Dr. Abraham Nwankwo, said that the debt/GDP ratio of 18.87 per cent was below the critical threshold of 40 per cent prescribed for countries in Nigeria’s category.

The DG also stated that the country planned to borrow a total of $9.3 billion within the two years.

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