By Kayode Tokede
The Minister of Finance, Mrs. Zainab Ahmed has said the Federal Government is not considering accessing the Debt Service Suspension Initiative (DSSI) loan due to the high risks the offer comes with.
Ahmed made this known on Tuesday in Abuja at the public presentation of the 2021 budget proposal.
Ahmed said that the Federal Government had assessed the offer and reviewed the loan agreement it had with bilateral partners it borrowed from, adding that it was limited in its ability to access the loan.
“We have also had to review the loan agreements between us and commercial lenders such as the private parties that buy our Eurobonds and right now we are limited in being able to access this.
“We understand that there will be a DSSI 2.0 that is currently being considered by G-20, not only in Nigeria, there are a number of countries globally that are not able to access the DSSI because of similar limitations that we have in Nigeria.
“The risks are high, and taking the offer might trigger an incidence of default by some of the lenders, so we have to play safe and not take it.”
According to her, the good news for Nigeria is that the component of the debt service obligation Nigeria has under the bilateral agreement is very small that it can continue to manage.
She, however, said that if the next version came up and the limitations were taken into account, the Federal Government might consider it, in spite of the risks, terms and conditions for the country.
The minister said that Eurobonds issuance to fund the 2021 budget was not an option, adding that the Federal Government would consider its options carefully when it was time.
She said this was because if the domestic market would give a better yield, there would be no need to go to the international capital market.
“On the other hand, if the market offers much better yield than the local market, then we will consider that option so I cannot tell you yes or no right now, it all depends on what happens in 2021.
“There are a lot of uncertainties in the global economy and we cannot predict what will happen in the international capital market in 2021,” she said.