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You are here:Home>>Strategic Research & Analysis>>Nigeria fine-tunes plans for Diaspora bond
Wednesday, 16 October 2013 12:37

Nigeria fine-tunes plans for Diaspora bond

Written by Chijioke Nelson
Minister of Finance and Coordinating Minister of the Economy, Ngozi Okonjo-Iweala Minister of Finance and Coordinating Minister of the Economy, Ngozi Okonjo-Iweala


THE inadequacy of budgetary allocations to offset capital expenditures, especially infrastructure developments may have compelled the Federal Government to fast-track processes for the proposed Diaspora bond.

Besides, the move would also serve as measure to build the nation’s debts yield curve.

The Minister of Finance and Coordinating Minister of the Economy, Ngozi Okonjo-Iweala, who made the disclosure, explained thatNigeria is planning to raise debt abroad regularly as Africa’s largest oil producer seeks to develop a benchmark for borrowers.

Nigeria returned to international debt markets for the first time in two years in July, issuing $1 billion in five-year and 10-year Eurobonds. Presently, plans are underway to raise $100 million by selling so-called Diaspora bonds, targeted at citizens living overseas.

“If it succeeds, we’ll do more,” Okonjo-Iweala said on the sidelines of the World Bank Group and International Monetary Fund meetings, adding that the sale will take place in the first quarter of next year.

“We intend to enter the market on a regular basis because we’re trying to build a yield curve.”
“Nigerians abroad would have sent $21 billion home by the end of 2013, according to World Bank figures, and the government wants “to tap some of that,” Okonjo-Iweala said.

The nation is stepping up debt sales to finance infrastructure as it faces inadequate budget allocations for capital spending. Meanwhile, the yield on Nigeria’s $500 million in Eurobonds due July 2023 dropped 18 basis points this month to 5.94 per cent yesterday, the lowest level since July 23, according to data compiled by Bloomberg.

The nation’s economy is projected to expand by 6.75 per cent next year, compared with an estimate of 6.5 per cent in 2013, the minister said. “The budget deficit will stay little changed at 1.9 per cent of gross domestic product. The outlook is reasonably good.

“We are keeping a tight fiscal balance. We believe in fiscal consolidation with growth. Whatever fiscal space we create we’re going to use that to tackle the bottlenecks, and for us, they are power and infrastructure,” she added.

The Guardian Nigeria

Last modified on Wednesday, 16 October 2013 12:44

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