The Nigerian government is to approach China for debt relief as part of strategy to contain the looming recession induced by falling oil prices and coronavirus pandemic, even as it will not seek a suspension of interest payments from its Eurobond holders.
“We have not considered investors of our commercial paper,” Finance Minister Zainab Ahmed said by phone from Abuja, the capital. “If it happens anywhere, if it’s something that would work, then we will look at it, but right now we are looking at multilateral lenders.”
Ahmed said it’s unclear how a debt service moratorium, which was requested by African finance chiefs last month, could be sought from holders of Eurobonds, which are actively traded. Nigeria paid $771 million in interest on its Eurobonds last year compared with $329 million in debt service to multilateral creditors, according to the country’s Debt Management Office.
The government plans to hold talks with China to seek a deferral of interest payments on bilateral loans, she said.
Worst Recession
“We will talk to the Chinese. We will negotiate multilateral loans and bilateral loans and where we get accommodation we will take it,” said Ahmed, without saying how much the government expects to save in payments this year.
The government of President Muhammadu Buhari has asked for $7 billion in loans from multilateral creditors, including the International Monetary Fund, to allow the government to increase health spending as the Covid-19 virus spreads in Africa’s most populous country. Tumbling oil prices have slashed revenue to the continent’s top oil producer, which could face its worst recession in decades this year.
Nearly half of Nigeria’s outstanding external debt is with multilateral lenders, with the World Bank Group being its top creditor with $10.1 billion in loans. Beijing-based Export-Import Bank of China is the second largest single creditor with loans totaling $3.2 billion while Eurobonds account for $10.86 billion or 39% of external debt.
-Bloomberg