The government of Nigeria has shared its plans to sell a Eurobond, which is a type of international loan. This is the first time it’s doing so since March 2022. To help with this, the government is working with big international banks like Citibank, JPMorgan Chase & Co, Goldman Sachs Group Inc., Standard Chartered Bank, and a local bank from Lagos called Chapel Hill Denham.
Nigeria plans to sell this Eurobond by June. This is a big step for Nigeria, which is the largest oil producer in Africa, as it tries to work with international financial markets again.
This sale is part of the government’s plan to get the money it needs for its big budget deficit. President Bola Tinubu has a budget plan for 2024 that spends a lot of money, leaving a gap of about 3.8% of the country’s total economy.
The government hasn’t decided yet how big this Eurobond will be. But, people close to the plan suggest Nigeria might borrow up to $1 billion from international sources in 2024. This foreign money is very important to help cover the big budget gap. The plan is to get this money from both local and international loans and help from global financial groups.
The Finance Minister, Wale Edun, said that one reason for selling Eurobonds is the chance to pay less interest due to ongoing economic changes in the country.
Since becoming president in May 2023, President Tinubu has made policies to draw in foreign investment and improve the economy. These changes include lowering the value of the national currency twice and stopping fuel subsidies, which was a big deal.
Also, the government plans to borrow a smaller amount than before from a bond auction in March 2024, aiming for N450 billion instead of the N2.5 trillion it initially wanted. This auction will include a new 3-year bond and other bonds, all to help pay for the budget deficit. The Debt Management Office, which handles government debt, has announced it will sell three different bonds, each aiming to raise N150 billion, reaching a total goal of N450 billion for March 2024.
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