Nigeria Plans to Pay Local Debt With Cheaper Foreign Loans

Nigeria approved a debt-management plan that will allow it to reduce short-term domestic borrowing in favor of cheaper, longer-term foreign loans, Minister of State for Finance Yerima Ngama said.

The strategy, which will run from this year to 2015, will increase foreign borrowing to about 40 percent of total debt from the current 14 percent, he told reporters in Abuja, the capital, today.

“We are going to have a smooth transition so that everything is well managed and that there is no shock to the system,” Ngama said.

Nigeria’s domestic debt currently stands at 6.49 trillion naira ($41 billion), or 86 percent of the total owed as at March 31, according the website of the Debt Management Office.

The government will look to “access concessionary windows” from institutions including the African Development Bank, the Islamic Development Bank and the World Bank to reduce its growing, and more expensive, domestic borrowing.

President Goodluck Jonathan on Feb. 27 approved a 4.98 trillion naira spending plan for the year with recurrent expenditure, such as salaries, accounting for 2.3 trillion naira.

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