The DMO’s medium-term strategy for 2016-19 has a target for a 60/40 mix for the FGN’s domestic and external debt obligations. Over the four years through to December 2016, the ratio has moved ten percentage points towards the target, to 76/24.
This move is due more to naira exchange-rate depreciation than changes in the currency of issuance. Our chart does not capture the DMO’s latest data release for end-June 2017, which is partial and includes the naira debt of state governments in the domestic total.
H1 2017 saw the return of the FGN to the Eurobond market and the issuance of a diaspora bond to raise a further US$300m. This would have pushed the mix of the FGN’s obligations closer towards the 60/40 target set by the DMO.
In May the director-general of the budget office, Ban Akabueze, said that the FGN was looking to borrow US$3.5bn externally for financing of the 2017 budget deficit. This was a restatement of the N1.07trn projection set in the approved budget, and tacit recognition of the fact that the issuance in H1 was allocated towards financing of the 2016 deficit.
Akabueze added that the US$3.5bn would consist of US$2.0bn on concessionary terms and US$1.5bn from the commercial market including Eurobonds. Talks with the World Bank on concessionary lending appear to have faltered although a disbursement of US$400m from the African Development Bank may be forthcoming.