Kemi Adeosun has said the Eurobond and AfDB secured will be used to fund capital projects identified in the 2016 budget.
The Ministry of Finance in a statement signed by its Director of Information, Mr Salisu Dambatta said that the 2016 budget spending cycle had been extended to the end of March 2017 to accommodate the lateness.
The News Agency of Nigeria (NAN) reports that the Federal Government recently announced its newly established one billion dollars Global Medium Term Note programme.
The Notes will bear interest at a rate of 7.875 per cent and will mature on Feb. 16, 2032 with a bullet repayment of the principal.
The government intends to use the proceeds of the Notes to fund capital expenditures in the 2016 budget.
The Notes represent the country’s third Eurobond issuance, following issuances in 2011 and 2013.
The Notes were approximately 8 times oversubscribed with orders in excess of 7.8 billion dollars compared to a pre-issuance target of one billion dollars demonstrating strong market appetite for Nigeria.
The Minister of Finance, Mrs Kemi Adeosun said the Eurobond that was secured this week and the AfDB, secured late 2016, would continue to be used to fund capital projects identified in the 2016 budget.
“The government’s debt strategy has been well defined and approved by the National Assembly.
"We are focused on re-balancing our debt profile to ensure we have longer term debt that can be used to fund infrastructure development.
You can expect to see us continue to raise international funds over the coming two years as we work toward an optimal debt profile,’’ she said.
Giving the advantage of raising Eurobonds to domestic borrowings or borrowing from other external sources like World Bank or China, Adeosun said that the interest rates were cheaper.
“We have borrowed one billion dollars over a 15-year period, with an annual coupon of 7.875 per cent.
“That compares to an average Naira borrowing rate of 15 per cent.
"The international capital markets are a key source of capital for us, and our sovereign issuance provides a key benchmark for corporate borrowers looking to tap the ICM.
"Ultimately, we want to achieve an optimal mix of borrowing from the ICM and other external sources, including concessional funding from the World Bank and China as part of the 2017 budget process,’’ she said.
Adeosun said that apart from borrowing, the Federal Government was serious about expanding the tax base to generate added revenue to critical infrastructure projects.
She said that Nigeria’s tax contribution to Gross Domestic Product was currently only six per cent and one of the lowest anywhere in the world.
According to her, it reflects decades of the populations’ unwillingness to contribute to government revenue, often because they don’t believe the money will be spent appropriately, or for their own good.
“That is the situation we have to change, and it is why we spent so much of 2016 re-structuring the way government collects, allocates and spends money.
"We have to build confidence in that process, if we are to attract the kind of tax base that can deliver increased government revenue.
"We believe that if we show Nigerians things can be done differently, then we can rebuild the social contract with citizens to pay their fair share of taxes.
“We are already beginning to deliver on this, with a focus on improved customs collections, including migration to a single window.’’
According to Adeosun, the government is aware that people are looking for quick fixes to cushion the current bite of recession, and promised that the social intervention programmes will tackle such.