The Federal Government is seeking to raise N450 billion from the investing public in a new debt issuance aimed at bridging government’s deficit and deepening the domestic capital market.
It was learnt last night that the Debt Management Office (DMO), which oversees the issuance and management of Nigeria’s sovereign debts, will today conduct a primary market auction (PMA) for three issuances, through which it aimed to raise the funds.
The three bonds on offer included, a new issuance- the three-year FGN March 2027 and reopening of the seven-year, 18.50 per cent FGN February 2031 and the 10-year, 19.00 per cent FGN February 2034 bonds.
However, market pundits said the final allotment may triple given the recent trend in oversubscription of government issuances and final allotments.
A similar PMA for the sale of Nigerian Treasury Bills (NTBs) by the Central Bank of Nigeria (CBN) recorded oversubscription of more than 827 per cent, enabling the government to significantly scale up its final capital raising.
While the apex bank had offered N728.2 million 91-day instruments, subscription was N85.5 billion, with the government finally allotting N5.7 billion. Initial offer size for 182-day NTBs was N918.4 million as against subscription of N49.7 billion. Final allotment for the 182-day NTBs was N4.9 billion.
Also, the initial offer size for 364-day NTBs was N159.9 billion, but subscription totaled N1.4 trillion with final allotment reduced to N150.8 billion.
Nigeria has seen a strong demand for its sovereign issuances on the back of government’s assurance that Nigeria’s economic condition was not so bad that the country would require external assistance in restructuring its debts.
The government had also outlined policy measures to reduce debt finance and rejig non-debt revenue in 2024.
Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, said the government was certain that Nigeria’s economy and its debt profile would not require any dire strait measures from international lenders.
Edun, who spoke against the background of Nigeria’s national debt, and concerns that shortfall in revenue could further worsen government’s financial sustainability, said the overall outlook of the economic potential and the reforms by the government gives a strong assurance that Nigeria will not fall into any likelihood of seeking international assistance on debt restructuring.
According to him, the government is implementing a reform package in the form of strong fiscal policies that promote fiscal discipline, effective debt management, and prudent borrowing practices.
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“These policies help the government generate enough revenue and allocate resources efficiently, reducing the likelihood of needing debt restructuring.
“The ongoing reforms are a package. They are being implemented in a steady manner but they are complete in the sense that they deal with revenue side, the fiscal side; that is the government revenue and government expenditure.
“The reforms deal with monetary side through the Central Bank. Some measures have been taken by the Central Bank, including the foreign exchange market reforms. They deal also with the issue of financing, making sure that the deficit can be financed, among others.
“There are plans, strategies and targets in each of those areas. While it is a continuous work-in-progress, nothing ever stands still regarding the economy. I will say there is a well-laid out plan that is being constantly refined and this is led and spearheaded by Mr President’s eight-point priority areas,” Edun said.
According to the minister, the government would combine a variety of fiscal, economic and accounting strategies to reduce the country’s budget deficit by nearly half, in a major move aimed at blocking leakages and redirecting financing to long-term economic growth.
Edun outlined the comprehensive strategy that will underpin the implementation of the 2024 budget, with the overall aims of reducing deficit, enhancing revenue and locking in significant values into expenditures.
To achieve these objectives, the government will be implanting a variety of strategies including a thorough review of recurrent expenditure and prioritizing essential spending and eliminating wasteful or unproductive expenditures.
These may include streamlining administrative processes, reducing travel costs, and consolidating certain functions.
Also, there will be efficient allocation of capital expenditure which is crucial for driving economic growth. The government will prioritize capital projects that have a high impact on productivity, job creation, and infrastructure development. These includes investing in energy, transportation, and other critical sectors.
In the area of revenue generation, the government will expand the tax base by identifying and incorporating new sources of revenue, such as the informal sector and digital transactions. These may involve simplifying tax laws, improving tax administration, and implementing targeted compliance measures.
Government will also improve tax collection efficiency to maximize revenue generation while investing in technology, strengthening tax administration systems, and enhancing taxpayer education to improve compliance and reduce tax evasion.
Also, government will explore alternative revenue sources beyond traditional taxation, such as asset monetization and privatisation, public-private partnerships, and targeted fees for specific services.
The government will also incentivize investment and economic growth by implementing tax breaks or other incentives for priority sectors. These strategies are expected to attract domestic and foreign investments, thus fostering job creation and economic expansion.
Already, the government plan to collaborate with state and local governments to enhance tax administration coordination and reduce tax leakages and eliminate multiple taxation.
This collaboration will streamline tax collection, improve compliance, and optimize revenue generation.
