Nigeria: Finance Ministry in talks with CBN over tradable security

“On CBN financing, we will not normally make a line provisioning for the financing. So we have domestic borrowing in the budget and that covers whatever remit of financing required to fund the national budget."

The Finance Ministry and central bank in Nigeria are planning to convert loans taken from the apex bank into securities used for trades, said Zainab Ahmed, the Finance Minister, according to a report by Nairametrics.

Reportedly revealed in the public presentation of the approved budget for 2021, the Finance Minister and DG Budget Office mentioned the highlights of the Budget.

Responding to questions about the plans on borrowing in 2020, Ahmed said that the federal government is working with the Central Bank of Nigeria (CBN) to regularize the loans. She noted that the plan is to turn the borrowing into formal borrowings that could be redeemed and sold as bonds.

"On CBN financing, we will not normally make a line provisioning for the financing. So we have domestic borrowing in the budget and that covers whatever remit of financing required to fund the national budget", she added.

Ahmed further confirmed that the ministry is undergoing talks with CBN to turn the loans into formal borrowings after being agreed on fixed rates, tenures, and borrowing costs.

She stated, "we are working with the CBN to regularise the previous borrowing that have been made to turn them into formal borrowing and by the Nigerian economy and to this extent, the CBN and I (fiscal authorities) need to agree on the rates and the tenures and the cost of the borrowing, so we would be formally doing that in early 2021 on the previous borrowing that has been made, and also projected borrowings in 2021. So we will design special instruments that limits what is done in terms of domestic borrowing from the CBN."