Global financial condition favours Nigeria for hard, domestic currency bond issuance

The International Monetary Fund (IMF) on Wednesday said the global financial condition is favourable to Nigeria and that issuing bonds in hard and domestic currencies are possible.

Tobias Adrian, financial counsellor, IMF, said this while presenting the Global Financial Stability Report at the ongoing Imf/world Bank annual meetings in Washington DC.

Adrian said flows of investment to sub-Saharan Africa have been strong and are expected to reach record highs this year.

He said both domestic and external debts market are important for economic growth and development and that both markets should be well developed.

Adrian said “borrowing has to be managed in a responsible manner” and that it “can be helpful for economic growth and investment but it can also be dangerous when negative shocks arise”.

As at June 30, 2019, Nigeria’s total external debt stood at N8.3 billion ($ 27.2 million), according to data published by the Debt Management Office (DMO).

Nigeria spent N2.2 trillion on servicing outstanding loans in 2018 compared to N1.68 trillion expended on infrastructure, data released by the Central Bank of Nigeria (CBN) showed.

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“Nigeria has a large exposure to domestic debt particularly from central bank bills. There are a lot of higher redemption and more rollovers going forward. So, those risks, especially with respect to local currency debts, managing debts and behaviour of non-resident debt is very important,” said Evan Papageorgiou, deputy division chief, monetary and capital markets department, IMF.

Adrian said the external debts of the emerging and frontier economies have risen to 160 percent of exports on average, up from 100 percent in 2008.

He said a sharp tightening in financial conditions and higher borrowing costs would make it harder for them to service their debts.

“External debt is rising among emerging and frontier economies as they attract capital flows from advanced economies, where interest rates are lower,” Adrian said.

Total public and nonfinancial private sector debt in percentage of GDP for G20, emerging markets stood at 190.1 percent in 2018 compared to 183.3 percent in 2017 and 99.8 percent in 2007.

In dollar terms, total public and non-financial private sector debt stood at $44.5 billion in 2018 as against $43.2 billion in 2017 and $ 11.3 billion in 2007, according to the IMF global debt database (2019, forthcoming) preliminary estimates.

Adrian advised policymakers to foster the further development of sustainable finance – an approach to investment that takes environmental, social and governance factors into account.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.