Debt: FSDH Advises FG To Issue Zero-coupon Bonds

The FSDH Merchant Bank has suggested that the Federal Government should consider issuance of zero-coupon bonds to manage the high interest expenses on the debt.

It stated this in its monthly economic and financial markets outlook titled, ‘Economy in need of boosters: Priorities for a second term.’

Part of the report read, “In order to manage the high interest expenses on the debt of the Federal Government relative to its current revenue, it should consider issuance of zero-coupon bonds. Such bonds and other bond issue going forward, should be tied to specific projects that have economic value addition to the country. And there should be a mechanism to assess that debt contracted is used for intended projects.”

It quoted available figures from the Central Bank of Nigeria, which showed that Nigerians spent a total of $33.04bn between 2009 and 2018 as personal travel expenses on education and health-related issues.

This amount increased the demand pressure in the foreign exchange market, it added.

The FSDH said the amount could have been saved if the health and education sectors in Nigeria were well funded.

It mentioned the need for developments of the solid mineral sector in Nigeria in order to expand the revenue base of the country and also earn more foreign exchange.

The FSDH Research recommended a model where the government would partner with the private sector to invest in the exploration in the sector and after gathering adequate data on reserves, government could sell mining licence.

“Development of the solid minerals would also help boost the economies of the states of the federation since all of states in the country had at least one solid mineral,” it stated.

The report added that the government should reintroduce tolls on the federal highways in order to source funds for road maintenance across the country.

The FSDH also said the government should consider crude oil swap arrangements with construction companies either local or foreign, for road or rail construction across the country.