Fed Govt intends to raise N190b in new bond auction

The federal government will today raise about N190 billion through a new auction of regular domestic bonds.

The Debt Management Office (DMO), which oversees the government’s debt issuance and management, has indicated it would be offering three bonds intending to raise N190 billion.

The bonds being offered are reopening of previous bond issuances. These included the five-year, 19.30 percent April 2029 FGN, with an offer size of N70 billion; the seven-year 18.50 percent February 2031 FGN Bond, with an offer size of N70 billion and the nine-year, 19.89 percent May 2033 FGN Bond, with a size of N50 billion.

Nigeria has seen a strong demand for its sovereign issuances on the back of the 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 a shortfall in revenue could further worsen the government’s financial sustainability, said the overall outlook of the economic potential and the reforms by the government give 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.

“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 the revenue side, the fiscal side; that is the government revenue and government expenditure.

“The reforms deal with the 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 him, 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 implementing a variety of strategies including a thorough review of recurrent expenditure 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 an efficient allocation of capital expenditure which is crucial for driving economic growth. The government will prioritize capital projects that highly impact productivity, job creation, and infrastructure development. These include 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, the government will explore alternative revenue sources beyond traditional taxation, such as asset monetization and privatization, 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.