Given the turmoil arising from the spread of the coronavirus pandemic, Nigeria’s Finance Minister, Mrs. Zainab Ahmed, told journalists in Abuja on Monday the Federal Government will await better market conditions before issuing its planned $3.3bn Eurobond owing to the turmoil caused by the spread of the Coronavirus contagion (Covid-19).
Consequently, who spoke on the sidelines of the sidelines of a two-day International Conference on the Nigerian Commodities Market (ICNCM 2020), with the theme: “Commodities Trading Ecosystem: Key to diversifying Nigeria’s economy,” organized by the Securities and Exchange Commission (SEC), said the government will suspend all non-essential government spending listed in its N10.59tr 2020 budget. Only “major capital expenditures,” will be prioritized, she added.
Although the nation’s 2020 budget was approved based on a crude oil benchmark price of $57 per barrel, by Monday, according to Reuters, Brent crude was down to roughly $30 per barrel.
“Any expenditures that are not critical we must defer to do it at a later time when things become more normal,” she said.
An oil price crash caused by the toxic mix of a coronavirus-induced slump in demand and the collapse of a supply-cutting deal between OPEC and other oil producers such as Russia has forced Nigeria to revise its budget and alter its spending plans.
Mrs. Ahmed also said the virus-induced market turmoil would impact external borrowing, including the Eurobond, originally planned to partly fund the 2020 budget deficit.
“We are not going out immediately because the market indication is not in favour of external borrowing at this time. Even if we get the approvals we will defer it and watch the market, and go out only when the timing is right.”
Borrowing costs for many riskier emerging markets have risen sharply in recent days, with all of Nigeria’s dollar-bonds now yielding between 12%-14% compared with yields of less than 3% on shorter-dated issues in mid-February.
Last month, the nation’s Debt Management Office said it expected to appoint advisers for the Eurobond issue through an open competitive bid process and expected to complete an approval process for the sale swiftly.
Photo caption: Mrs Ahmed (second left), addressing newsmen in Abuja on Monday.
