After the Federal Executive Council (FEC) meeting yesterday, the Minister of Finance, Mrs Kemi Adeosun has disclosed that the refinancing of Nigeria’s domestic debts into treasury bills was approved yesterday by the Federal Government.
The $3bn estimated bills were considered to lessen the country’s cost of borrowing and to enhance the country’s Economic recovery and Growth Plan
According to Mrs Adeosun; “The memo that I presented and was approved by council was part of our efforts to restructure our debt portfolio. We got approval in June that we would restructure our debt profile. We would borrow less in Naira and more in foreign currency because it is cheaper and also because we want to prevent crowding out the private sector.
We want to create room for the private sector to be able to borrow so they can grow and create jobs. So, as part of that, we sought approval and that was granted for us to refinance treasury bills.
As treasury bills mature, we will be refinancing them into dollars. Up to $3 billion worth of treasury bills will be refinanced into dollars. As the Naira treasury bills mature, we will be issuing dollar instruments. So, we are not increasing our borrowings; we simply are restructuring. Instead of borrowing naira we are bearing dollars.”
It was gathered also that the Minister of Budget and National Planning, Mr Udoma Udo Udoma, mentioned that FEC approved the Medium Term Expenditure Framework (MTEF) 2017 to 2020 and fiscal strategy paper.
Udoma said: “Council today approved a memorandum that was submitted by my ministry and approved the 2018-2020 MTEF. As we know, we have been having extensive consultation in the last few weeks with governors, members of the public, leadership of the National Assembly about the MTEF.
So, we submitted it and it was approved by council. The highlight of it is that we have committed to achieving a 7% growth rate by 2020 at the end of the three-year plan in accordance with the Economic recovery and growth plan.
MTEF is based on the economic recovery and growth plan and in terms of the trajectory of getting the 7%, we have approved a slightly different trajectory in the sense that by next year our target 3.5% in 2018, in 2019 it will be 4.5% growth rate and of course in 2020 it will be 7% growth rate.
In terms of crude oil production, our estimate projection for next year is 2.3 million barrels per day. We expect it to be broken down to 1.8million barrels per day regular crude and 500 thousand barrels per day in terms of condensate.
The price we projected for next year is $45. We are also committed in the MTEF to explore ways of raising additional revenue to reduce debt service to revenue ratio. As the Minister of finance said, that is part of the policy of this government to make sure that borrowing is controlled and to make sure to keep a reasonable debt service to revenue ratio which will of course help to bring down interest rates.
With respect to the exchange rate, it is as indicated by Central Bank – N305. With respect to the target, it is 2.3 million barrels per day.
NNPC had assured that this country has capacity more than 2.3 million barrels per day. Consequently, we have a lot of constraints. Some of the constraints have to do with cash call investment.
We are also committed in the MTEF FSP to explore ways of raising additional revenues to reduce the debt service to revenue ratio.
It is part of the policy of this government to make sure that out borrowing is controlled and to keep a reasonable debt service to revenue ratio which will help to bring down interest rate.”
He also revealed that the Federal Government was having discussions with the governors, public and members of the National Assembly on MTEF for past weeks from now