Last Wednesday, Mrs Zainab Ahmed, Nigeria’s Finance Minister, conducted a Bloomberg interview where she spoke at length about the Nigerian economy and its fiscal health. It was the longest interview I had seen of her—outside of her budget presentations and panel discussions—speaking about the Nigerian economy on international media, and maybe for a good reason.
Communication is highly critical for fiscal policy, which is why when the finance minister claimed that Nigeria is exploring debt restructuring options, it caused an uproar.
Debt restructuring indicates that the country can longer meet its debt obligations and is in dire need of financial help. This affects investor perception of the country, as they would be reluctant to loan Nigeria more money.
To show the severity of the situation, the Finance Ministry and the Debt Management Office are currently attempting some damage control measures. While this might go a long way to reverse the situation, it won't erase the initial impact.
During the interview, she spoke about everything from Nigeria’s growth expectations to crude oil theft, the 2023 budget and most importantly, the federal government’s debt.
A few minutes into the interview, the Bloomberg interviewer, Oliver Crook, asked if Nigeria would be exploring any debt restructuring and our finance Minister replied in the affirmative. She later spoke on the government’s plans to securitise the CBN’s ways and means of financing.
This led to a frenzy on social media. Analysts were alarmed that the Minister had mentioned that the country would restructure its debt when the plan was only to securitise loans.
This article will explain the Finance Minister’s response and why it caused a frenzy.