By Sahabi Abdul
President Muhammadu Buhari’s administration will shun foreign borrowing this year, relying instead on cheap domestic debt to fill the gap in the budget, Finance Minister Zainab Ahmed said.
A prime target of the government is more than 850 billion naira in unclaimed dividends and dormant bank accounts, pooled in a trust fund created by the 2021 Finance Act. Borrowing costs for the government are also at their lowest in a long time, favouring government bond issues and treasury bills sales.
“As long as the domestic capital markets are favorable in terms of rates, we won’t be going to the international markets,” Ahmed said in an online briefing on the 2021 budget signed into law on New Year Eve. Nigeria will only go for foreign funding sources “if the conditions are right.”
The country also has no further plans to borrow from the international Monetary Fund after receiving 3.5 billion dollars last year. Nigeria will instead move to meet the terms requested by the World Banks to disburse a 1.5 billion loan.
A low interest regime that ensued out of central bank measures have left government bond yields at their lowest in more than a decade, far below the inflation rate. The government has been the major beneficiary, while returns on savings and investments in government debt have plunged.