The Federal Government is considering the issuance of a dollar-denominated bond in the second quarter of 2024 to attract foreign exchange liquidity and stabilize the naira.
Minister of Finance Mr. Wale Edun stated this while briefing State House Correspondents at the Presidential Villa, Abuja after the Federal Executive Council (FEC), presided by President Bola Tinubu.
“We are putting in place a bond issue targeted at Nigerians in the Diaspora that can attract them to buy into what is going on in Nigeria as well as give themselves good returns,” the Minister disclosed.
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The bonds as being designed are expected to target Nigerians at home and in the diaspora who hold dollar savings in domiciliary accounts, estimated at $30 billion. The government also hopes to bring foreign currency cash held outside the formal banking system into the economy.
Although concerns have been raised by the International Monetary Fund (IMF) that the domestic dollar bond issuance could exacerbate pressures on the naira and increase the costs associated with naira securities, the Finance Minister explained that there is already competition from several Nigerians within and outside the country willing to invest for better interest yielding.
“Its a competition for those funds which are earning relatively low rates, and especially for Nigerians who look at what is going on in the country and want to be part of it.
“And so it is a coming of age of Nigeria as a financial center, or at least, a first step for an important one, not just for Nigeria for Africa, that we should be able to mobilize resources from abroad and not always reliant on the international financial structure,” the Finance Minister added.
Mr. Edun also disclosed that the Debt Management Office (DMO) is presently working on appointing advisers and determining the offer size, tenor, and pricing modality for the bonds issuance with the target investors being local residents and the Nigerian diaspora.
