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Nigeria to delay non-critical spending, defer Eurobond sale -finmin

Published 16/03/2020, 20:59
© Reuters.

By Camillus Eboh
ABUJA, March 16 (Reuters) - Nigeria will postpone all
non-critical government spending and wait for better market
conditions for a planned $3.3 billion eurobond offering due to
the turmoil caused by the coronavirus pandemic, the finance
minister said on Monday.
Minister Zainab Ahmed told journalists in Abuja that
Africa's largest economy will prioritize "major capital
expenditures."
"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. The 10.59 trillion naira ($34.6 billion) budget included a
benchmark of oil prices at $57 per barrel. On Monday, Brent
crude slumped to roughly $30 per barrel.
Ahmed also said the virus-induced market turmoil would
impact external borrowing, including for the eurobond it planned
to issue to partly fund its 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 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. ($1 = 306.0000 naira)

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