FG to take $1bn Euro, $100m Diaspora bonds

Afrik Update

New,Nigeria

By Iheanacho Nwosu and Chuks Akunna

                 

Finance Minister and Co-ordinating Minister for the Economy, Dr. Ngozi OKonjo-Iweala, yesterday asked the National Assembly to approve the floating of $1 billion bond, and another $100m diaspora bond. Okonjo Iweala spoke when she appeared before the House of Representatives Committee on Aids, Loans and Debt Management to defend  the 2012-2014 Medium Term Expenditure Framework.

The minister who said the country’s total external debts is $6.2 billion as at the end of September, said the National Assembly’s legislative backing for the bonds was necessary to help in the reengineering effort of the Federal Government. She explained that all debts procured by the government were meant to promote serious infrastructural development.

Speaking specifically on why the government decided to retune its external borrowing plan in the current Medium Term Expenditure Plan, the minister said: “We are proposing three amendments to this external borrowing plan: We have an amendment to add water supply project for rivers state to the tune of 200 million dollars. This will be supported through the ADB to be a concessional loan. 40 years of duration, 10 years of grace. 0.7 per cent charge. “We also propose to swap some of the existing loans in this plan to take them out and substitute in their place, a facility to kick start Housing mortgage finance in Nigeria.

And we are thinking that this will be to the tune of about $300 million “And the final thing is to bring to the notice of the Committee the plan that we have been developing all along fora Euro-Bond of one billion dollars. You will recall that during President Yar’Adua’s administration plans were initiated for the first EUro-Bond. Preparation started and it was successfully floated at the beginning of January 2011. It has been highly subscribed. It was 200 per cent over subscribed. “And this established a yield curve for Nigerians and thereby helped to be able to go and float Euro-bond themselves. So this Euro-bond is a continuation.

We just wanted to bring that to your attention that in addition to this borrowing plan, there is a plan for Euro-Bond of a billion dollars,” she said. She continued: “There is also a $100 m of a diaspora bond to attract people in the diaspora to bring their money back to invest in infrastructure. So those are the proposals we would want to put before you.”