The Minister of Finance, Mrs. Kemi Adeosun, on Thursday said the decision of the Federal Government to refinance its $3bn worth of short-term Treasury Bills into longer tenured international debt was expected to save the country N91.65bn per annum.
The Finance Minister expressed confidence that the Federal Government’s revenue and debt management strategy would mitigate the country’s debt service risk and fast-track her development.
In addition, the Minister noted that the Government was refinancing its inherited debt portfolio and this would lead to significant benefits, particularly a reduction in cost of funds. She stated that “Other benefits of our revenue and debt management strategy include improvement in foreign reserves as well as reduced domestic debt demand, which will reduce crowding-out of the private sector and support the aspirations of the monetary authorities to bring down interest rates.”
While welcoming the advice of Nigeria’s International Development Partners, including the International Monetary Fund, Adeosun said the strategy would achieve a number of objectives for the country.
She stated that a key element of the economic reform strategy was the mobilization of revenue to improve the debt service to revenue ratio. This, the minister noted, was being undertaken through a number of initiatives, including the plugging of leakages and the deployment of technology in revenue management.
She added that the ongoing Voluntary Assets and Income Declaration Scheme would equally impact positively on the level of tax collections.
Adeosun said, “The difference in our economic strategy is that we are changing the mix of revenue sources available to Government from the traditional oil or debt to a combination of oil, debt and domestic revenue. “This is a long-term strategic reform, which is critical to our future economic growth, and in the short-term will enable our debt service to revenue ratio to improve.”
The Government, according to her, does not see a significant devaluation risk as the implementation of the Economic Recovery and Growth Plan, over the medium term, is such that the Naira is expected to strengthen.