Nigeria to Raise 867.5 Billion Naira to Fund Deficit

By Dulue Mbachu

Feb. 12 (Bloomberg) -- Nigeria plans to sell 867.5 billion naira ($5.74 billion) worth of bonds, about a fifth of planned expenditure this year, to fund the budget deficit, Abraham Nwankwo, director-general of the Debt Management Office, said.

“That is the minimum we’ll raise from the Nigerian bond market” in 2010, Nwankwo told reporters today in Lagos, the commercial capital.

Budget proposals now being considered by lawmakers envisage spending of 4.1 trillion naira this year. The planned sale of bonds is 66 percent higher than the 524.1 billion naira sold last year, according to figures presented by Nwankwo.

Nigeria, which depends on oil and gas exports for more than 80 percent of government revenue, has been striving to cover gaps in income caused by conflict in its southern oil region and a decline in crude prices since 2008. Armed attacks targeting the oil industry cut more than 25 percent of Nigeria’s crude exports between 2006 and 2009.

The West African nation also plans to reintroduce this year a $500 million international bond it suspended last year because of the global financial crisis, should it be approved by parliament, Nwankwo said.

Nigeria’s total public debt stock currently stands at 3.8 trillion naira, the equivalent of $25.7 billion, according to the Debt Management Office. Out of this figure, 85 percent is domestic debt of 3.2 trillion naira, while 15 percent, or $3.9 billion, is external debt, it said.

The ratio of Nigeria’s public debt to its gross domestic product of 20 trillion naira is 13.8 percent, compared to more than 50 percent before the country exited its Paris Club debts in 2005, Nwankwo said. Funds raised from bonds have been used to build roads, fund agriculture and buy new train engines to revive the country’s railways, he said.