By Blaise Udunze
AHEAD of its planned eurobond issue soon, the Federal Government, Wednesday, indicated it would hold a non-deal roadshow with investors in London next Tuesday as part of efforts to explore fund-raising options to finance a record N2.2 trillion budget deficit widened by the fall in oil revenues.
A reliable source revealed that Standard Chartered Bank is organising the meeting, where Finance Minister, Kemi Adeosun, and officials from the Central Bank of Nigeria (CBN) and Debt Management Office (DMO) will meet investors to update the market on government policies.
Nigeria plans to borrow as much as $10 billion from debt markets, with about half of that coming from foreign sources, to help fund a budget deficit worsened by the slump in oil prices that has cut revenues and weakened the naira.
The Director General of DMO, Abraham Nwankwo, had last week disclosed it was likely to sell eurobonds this year. He said that out of the N2.2 trillion budget deficit, N1.84 trillion will come from borrowing from both local and international markets.
“This is the first time the budget specified that all borrowed funds will be for capital expenditure. The sharing of internal and international borrowing is almost 50/50. We have been borrowing locally but this time round, we want to take advantage of the relatively low cost of funds externally. We do not want to borrow too much from the domestic economy so that we do not crowd-out the private sector which also has an important role to play in the economy,” he said.
Nigeria has pushed ahead with some reforms meant to free up cash to invest in badly needed infrastructure but critics worry about the pace, given the loss of oil revenues and a currency peg that has caused the economy to contract.