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FG to go ahead with Eurobond payment, seeks debt relief from china, multilateral agencies

FG has announced its intention to seek debt relief from China rather than ask for suspension of interest payments from its Eurobond holders. 

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Q1 2020 National Debt report, Buhari finally speaks on NDDC probe, urges NA to act with a sense of urgency

As the struggle to come up with measures to manage the adverse social and economic effects of the coronavirus pandemic continues, the Federal Government has announced its intention to seek debt relief from China rather than ask for suspension of interest payments from its Eurobond holders.

This was disclosed in a monitored report from Bloomberg, by the Minister for Finance, Budget and National Planning, Zainab Ahmed, on Tuesday, April 7, 2020.

The minister said that the Nigerian government will be discussing with China and the Multilateral institutions on the possibility of deferring interest payments on those loans as it is looking to mop up funds to make up for revenue shortfalls.

According to the Minister, ‘’We have not considered investors of our commercial paper’’

‘’If it happens anywhere, if it’s something that would work, then we will look at it, but right now we are looking at multilateral lenders.’’

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Going further, Ahmed said, ‘’We will talk to the Chinese. We will negotiate multilateral loans and bilateral loans and where we get accommodation, we will take it’’.

(READ MORE: FG ready for OPEC talks, as brent crude risk plunging to single digit low)

However, the Minister did not disclose how much the government hopes to save from these payments this year.

Eurobond funds,FG will not ask for debt relief for Eurobond, to seek debt deferral from china

It would be recalled that some days ago, the Bretton wood institutions, International Monetary Fund (IMF) and the World Bank Group, urged all bilateral creditors to suspend debt payment by Nigeria and other 75 International Development Association member countries that have requested for it.

The IMF said that the spread of the coronavirus pandemic in sub-Saharan Africa, would adversely affect the economic growth of the region, with direct disruptions to people’s livelihoods, reduced trade and investment, capital flight especially from foreign investors and tighter financial conditions.

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That was in addition to the call by the African Finance Ministers for a moratorium on all debt interest payments by their governments to multilateral institutions, other governments and private loans in response to the coronavirus crisis. They estimate that this will save the continent about $44 billion in 2020.

(READ MORE: FG abolishes fuel subsidy regime as full deregulation sets in)

Just yesterday, while addressing a press conference on Fiscal stimulus measures by government in response to the Covid-19 pandemic and the oil price fall, the Finance Minister announced the intention of the Federal Government to borrow $6.9 billion from multilateral institutions which includes the World Bank, IMF and the African Development Bank to help cushion the impact of the coronavirus pandemic on the Nigerian economy.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

2 Comments

2 Comments

  1. Anonymous

    April 8, 2020 at 12:23 am

    Does this government have any other plan than borrowing money everyday? What they borrow the funds for we don’t know and we don’t see what they invest on… One they they will borrow us into slavery which they are already doing.

  2. Pingback: IMF Loan to Nigeria Explained – Cheap Calling Rates

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Energy

NNPC opens bid for repairs of pipelines and depots on a finance and operate basis

The project is expected to be operated on a public-private partnership basis.

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NNPC, Pipeline Vandalism: Stakeholder collaboration, critical to tame menace - Kyari, Nigeria explains when it will fully comply with OPEC+ output cut

The Nigerian National Petroleum Corporation (NNPC) declared open on Tuesday, August 11, bids by interested private investors to repair the pipelines and depots that are serving the refineries.

These pipelines, built almost 4 decades ago, are very critical in the successful movement of crude oil to the country’s 3 refinery complexes located in Port Harcourt, Kaduna and Warri, and the subsequent movement of the finished petroleum products to the consumers.

The pipelines, which according to NNPC are in dire need of comprehensive repairs, have experienced years of incessant theft and vandalism as well as ageing.

READ MORE: Refinery operations still loss-making: Capacity utilisation of the four refineries still 0% 

This project is expected to be operated on a public-private partnership basis as the bidders are expected to finance and execute the project, then operate for an agreed number of years before transferring back to the NNPC. In other words, the bidders for the extensive repairs of these pipelines would have to finance them independently and operate for a defined period in order to recover their investment costs with throughput tariffs.

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It must be noted that this model is similar to the one that had been in place by the state oil giant for the refineries. The NNPC had also announced plans to get private investors to invest in the repair of the 3 refineries on a repair and operate basis, as they do not want to be involved in the management of these refineries.

The NNPC Group Managing Director, Mele Kyari, had said that the ultimate plan for these refineries was to allow it to run on the LNG model, where the shareholders would be free to decide on the fate of these refineries going forward.

READ MORE: NNPC states why it failed to fix refineries, to build 200,000 capacity refinery

The refineries, which have only run sporadically, were shut down by NNPC earlier this year while awaiting repairs and upgrade. These 2 projects are expected to be handled separately according to information made available on Tuesday.

In addition, the new pipelines would need intrusion detection systems, as well as deep burial, to stop theft or vandalism. The deadline for the submission of these bids is due by September 18.

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Economy & Politics

WTO Job: Okonjo-Iweala reveals how to resolve the rift between US and China

Mrs Iweala revealed how she hopes to resolve the rift between the United States of America and China.

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WTO, Okonjo-Iweala joins South Africa's presidential economic advisory council as nation struggles with recession

As the jostle for the top job at the World Trade Organization (WTO) becomes more intense, the Nigerian candidate, Ngozi Okonjo-Iweala, has disclosed some of her plans for the institution. The former Nigerian Finance Minister recently had an exclusive interview with CNBC Africa.

Speaking during the interview, Mrs Iweala revealed how she hopes to resolve the rift between the United States of America and China, the 2 biggest economies in the world, especially as regards trade issues. She also noted that part of her vision is to build a trade institution where there is greater trust among its members. She also stressed that the WTO, at this critical time, is needed to ensure that trade and global markets remain open.

READ MORE: Gold price up as COVID-19 cases rise, U.S-China tensions heighten 

On healing the rift between the US and China, Okonjo-Iweala admitted that it is going to be challenging and not be easy. She said:

Well this is not going to be easy, if it was easy, it could have been done a long time since. So it would be very challenging but it is not an impossible job. It is very clear that both the US and China have been helped and benefitted from the multilateral trading system in the past. Hundreds of millions have been lifted out of poverty. They have experienced shared prosperity in the economies and their countries.’

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The Nigerian candidate pointed out that it is important to remind the US and China of this shared prosperity. She then disclosed that she would listen to both countries to find out what really are the issues causing distrust among them. She said that she will not want to be involved in the larger political problems, but will rather separate the trade issues and focus on them and build this trust.

READ MORE: Dangote fertilizer plant to begin production this year

Going further on how to settle their rift, Okonjo-Iweala said, “You need to begin to find areas where there can be confidence-building and trade. Building trust is not talking about it, you have to have areas where both can work together and agree and we have a golden opportunity in the fisheries subsidies negotiations that are going on now because the US is a party to it, China is a party, the EU, all other members.’’

“It is a multilateral negotiation, so if they can sit around the table with others to negotiate this and have a successful outcome, that is one thing that will be shared in common between the 2. So that will begin to build confidence. Then reaching out both in the US and in China to talk to the policymakers, go where the decisions are made, talk to congress also in the US and begin to show the benefits of the system again.’’

READ ALSO: FG inks $3.9 billion deal with Chinese firm for construction projects 

She also said they will look at reasons why they need to work together because their rift may be causing negative externalities for other members. She is of the opinion that exposing all of these, working with them, and listening carefully will begin to build confidence.

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She believes that while achieving this will be difficult, focusing seriously on trade issues can create room for a breakthrough.

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Coronavirus

US hands over 200 ventilators to Nigeria

The US Ambassador to Nigeria said USAID and  Nigeria will work very closely over the next couple of weeks.

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US hands over 200 ventilators to Nigeria

The United States of America, on Tuesday, August 11th, handed over some 200 ventilators to the Federal Government of Nigeria. This was disclosed by the Federal Ministry of Health via its Twitter handle, following the handover ceremony in Abuja.

The US Ambassador to Nigeria, Ambassador Mary Beth Leonard, at the handover event, explained that the ventilators are compact & portable & can be easily mobilized to reach those patients with the most severe symptoms of COVID-19.

Speaking during the handover ceremony, the Ambassador said, “Their arrival fulfills the commitment discussed between US and President Muhammadu Buhari earlier this year. Our support includes; training on the use & maintenance of this equipment, ensuring that the ventilators can address other respiratory illnesses in the years beyond.”

According to her, the United States Agency for International Development (USAID) and  Nigeria will work very closely and energetically over the next couple of weeks, with the Presidential Taskforce on COVID-19, to bring these ventilators across each of Nigeria’s states & the Federal Capital Territory.

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“The United States has been pivotal in supporting Nigeria’s membership in the ‘Every Breath Counts’ Coalition. Nigeria is now one of 2 countries in Africa to have an “oxygen roadmap” that seeks to fight against pneumonia, hypoxemia, & now COVID-19,” she stated. She then added that as the U.S. Ambassador to Nigeria, she remains proud of the strong friendship between the two countries.

The Backstory: Last April, Nairametrics had reported when the Minister of Information, Lai Mohammed, said that “President Donald Trump assured that the United States stands in solidarity with Nigeria in this difficult time and promised to send ventilators to support the country in its fight against the pandemic.”

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