The minister explained recently that the debt refinancing plan, which was a major component of the total $5.5 billion loan package being considered by the government, was to help take care of the legal debts inherited from the immediate past Goodluck Jonathan administration.
Speaking on the possible benefits of the revenue and debt management strategy on Thursday, the minister said the strategy would involve converting short term Treasury Bills into longer tenured international debt at single digits interest rates.
According to a statement from her office, she said about N76.375 billion would be saved every year from borrowing the other $2.5 billion component of the loan; making a total annual saving of about N168 billion from the $5.5 billion loan.
“The proposed refinancing of $3 billion worth of short term Treasury Bills into longer tenured international debt is expected to save N91.65 billion per annum,” the minister added.
Other benefits of the strategy, she said, include improvement in the country’s foreign reserves through increased dollar inflow and reduction in domestic debt demand; as well as lengthening the maturity profile of the debt and reducing the rollover risk.
“This will significantly reduce the crowding-out of the private sector and support the aspirations of the monetary authorities to bring down interest rates in the country,” the minister explained.