Quick question on the “Paris club refund”

First a bit of background. Nigeria incurred a lot of debt in the 80’s mostly from the Paris club, a group of international lenders. The federal government took these loans and spent it alone. A proverbial chopping and cleaning mouth. The loans of course needed to be serviced and paid back. Now, since about 1995,… Continue reading Quick question on the “Paris club refund”

Woo hoo Eurobonds

  Finally some good news. The $1bn Eurobond sale was successful. It was almost 8 times oversubscribed with orders up to $7.8bn (we will still take only a $1bn). At 7.875% it is a lot lower than the 8.5% that was the initial target, although still a bit high. Especially considering returns elsewhere. You literally… Continue reading Woo hoo Eurobonds

The $30bn loan: Addendum

I had an article in the guardian last Tuesday where I argued that the country already had serious debt problems and that adding an extra $30bn might tip us into a debt crisis. I argued, at the very least, for a debt sustainability report detailing the outcomes given various scenarios. The debt management office does… Continue reading The $30bn loan: Addendum

The $30bn loan: The logic of elected officials and why the National Assembly must act

In 1978, due to strains on government finances and external reserves, the government resorted to international debt markets to finance itself. Between 1978 and 1982, a couple of “jumbo loans” were negotiated with international financiers. The logic seemed sound at the time. Establishment of a steel industry here. Industrial expansion there. And so on. In… Continue reading The $30bn loan: The logic of elected officials and why the National Assembly must act

Eurobonds + Currency Adjustment = HIPC

The math is very simple. You issue debt in foreign currency, say euros, at a certain effective interest rate say 9%. The new debt goes on your naira denominated balance sheet exchanged at an official rate of N214 per €. A few weeks later your currency, the naira, loses 40% of its value and now exchanges… Continue reading Eurobonds + Currency Adjustment = HIPC

Thoughts on MTEF. 1 of Many: Debt Issues

The new government has released it medium term expenditure framework, outlining its spending plans over the next three budget cycles. I have many thoughts but won’t talk about them all. I will pick out a few things which I think are interesting. The first is on the FG’s debt plans. According to the MTEF the… Continue reading Thoughts on MTEF. 1 of Many: Debt Issues