Finmin Ahmed: Nigeria to explore Eurobond market to fund 2021 budget

Nigeria is facing a challenging financial landscape as it strives to fund its budget in 2021. With limited resources and a need for substantial investment to drive economic recovery, the government is exploring various revenue options to bridge the gap. Dayo Amzat, Managing Director and CEO of Zedcrest Capital, sheds light on the country's financial outlook and the potential strategies to navigate the fiscal terrain. The government's ambitious revenue targets are juxtaposed against the current economic conditions, with a focus on tax collection and borrowing to meet the budgetary requirements. The ongoing discussion centers around the 2021 finance bill, which aims to streamline fiscal policies, enhance investor confidence, and stimulate economic growth. By removing barriers to revenue generation and offering incentives to key sectors like agriculture and transportation, the bill seeks to create a more conducive environment for business activities. Additionally, the performance evaluation of the 2020 budget provides insights into areas of improvement and operational efficiency, setting the stage for a more effective fiscal plan in the coming year. One key aspect of Nigeria's financial strategy for 2021 is the potential issuance of Eurobonds to supplement domestic borrowing. While the local debt market remains a primary source of funding, tapping into the Eurobond market can diversify the country's borrowing portfolio and access international capital at competitive rates. Despite concerns about debt sustainability, the gradual reduction in risk premiums for emerging markets post-COVID opens up opportunities for Nigeria to secure offshore financing on favorable terms. Amidst discussions about a $1.5 billion World Bank loan nearing finalization, concerns about debt sustainability linger. Nigeria's economy faces liquidity challenges, with revenue-to-GDP ratios among the lowest globally. Efforts to address inefficiencies in revenue generation, including subsidy reforms and market liberalization, are crucial for improving the country's financial stability and attractiveness to investors. By demonstrating commitment to economic reforms and sound fiscal policies, Nigeria aims to enhance its creditworthiness and access additional funding sources. Despite the ongoing financial constraints and debt sustainability concerns, Nigeria is proactively pursuing avenues to bolster its revenue streams and fund critical projects. By leveraging a combination of domestic and international borrowing, implementing structural reforms, and enhancing market transparency, the country seeks to navigate the intricate financial landscape and drive sustainable economic growth in the face of evolving global challenges.