Nigeria converts $8.2 billion overdrafts to longer-dated bonds

Nigeria's President Bola Tinubu's request to convert the country's N7.5 trillion ($8.2 billion) overdrafts from the central bank to longer-dated bonds has been approved by its lawmakers.

Why is this important: The longer-dated bonds will be added to the country’s debt. According to the president, the conversion will reduce the cost of servicing the debt to 9% per annum compared to the current monetary policy rate(MBR) which is 0.3%. It is also expected to improve the transparency of liabilities owed to the Central Bank.

The Bottom Line: Nigeria's total public debt has increased to 87.9 trillion Naira as of September 2023. The removal of the fuel subsidy and a disciplined approach to managing the country's finances primarily focused on revenue generation derived through infrastructure spending may improve its debt profile considering the high cost of foreign loans due to increased interest rates.