The government plan to cut borrowing further.   / Photo: Reuters

Nigeria has halved federal borrowing from the central bank, according to Finance Minister Wale Edun, as Africa's biggest economy works to curb monetary financing and shift to markets to plug revenue shortfalls.

President Bola Tinubu, who inherited an economy struggling with record debt, high unemployment, subsidies and large central bank financing, has promised to make the bank autonomous and more focused on its core mandate.

Central bank overdrafts to the federal government, so-called "ways and means," were popular with the previous administration, peaking at $53 billion in 2023 and fuelling inflation and budget deficits.

Edun announced in January that the practice would stop. "So far, we've brought down the overdrafts from 8 trillion Nigerian naira ($7 billion) to just about 4 trillion naira," Edun told Reuters on the sidelines of the International Monetary Fund and World Bank spring meetings.

Further reduction

The government planned to reduce it further, down to 2 trillion naira "chiefly by taking up the responsibility of borrowing from the market, which is the right thing to do."

Edun also added that Nigeria could return to international capital markets this year. Ivory Coast, Benin and Kenya have all been issuing bonds this year as international capital markets have reopened to Sub-Saharan Africa issuers.

This followed a near-two year hiatus after the fallout from COVID-19, Russia's war in Ukraine and rising global interest rates made foreign currency debt prohibitively expensive for most from early 2022 onwards.

Edun said the government was listening to its advisors on the appropriate timing of th e next Eurobond issue.

"We believe the market is open for us, and we are happy we have that option," he said. "It could be this year, but then it might not be - timing is a matter for the market."

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