Nigeria will postpone all non-critical government spending and wait for better market conditions for a planned $3.3 billion eurobond offering due to the turmoil caused by the coronavirus pandemic, the finance minister said on Monday.
Minister Zainab Ahmed told journalists in Abuja that Africa’s largest economy will prioritize “major capital expenditures,” Reuters reports.
“Any expenditures that are not critical we must defer to do it at a later time when things become more normal,” she said.
An oil price crash caused by the toxic mix of a coronavirus-induced slump in demand and the collapse of a supply-cutting deal between OPEC and other oil producers such as Russia, has forced Nigeria to revise its budget and alter its spending plans.
The 10.59 trillion naira ($34.6 billion) budget included a benchmark of oil prices at $57 per barrel. On Monday, Brent crude slumped to roughly $30 per barrel.
Ahmed also said the virus-induced market turmoil would impact external borrowing, including for the eurobond it planned to issue to partly fund its 2020 budget deficit.
“We are not going out immediately because the market indication is not in favour of external borrowing at this time. Even if we get the approvals we will defer it and watch the market and go out only when the timing is right.”
Borrowing costs for many riskier emerging markets have risen sharply in recent days, with all of Nigeria’s dollar-bonds now yielding between 12%-14% compared with yields of less than 3% on shorter-dated issues in mid-February.
Last month, the Debt Management Office said it expected to appoint advisers for the eurobond issue through an open competitive bid process and expected to complete an approval process for the sale swiftly.