The Debt Management Office (DMO) revealed that the Federal Government (FG) will issue a green bond to fund the fiscal year 2023 budget.
DMO announced this nearly four years after the government issued its last green bond.
Patience Oniha, DMO’s director-general, stated this over the weekend in Lagos at the annual conference of the Capital Market Correspondents Association of Nigeria (CAMCAN).
DMO’s director-general stated that the federal government is looking into alternative funding sources for the ₦10.78 trillion budget deficit, which is why the green bond is being issued.
Green bonds are liquid, fixed-income financial instruments used to raise funds for climate mitigation, adaptation, and other environmentally friendly projects.
Oniha also stated that green bond issuance would be part of the government’s debt strategy in 2023, though major details such as size and timing have yet to be determined.
She went on to say that the government raised ₦25.59 billion in green bonds between December 2017 and June 2019 to fund seven projects, including renewable energy, afforestation, agriculture, water, and transportation.
Meanwhile, the government plans to finance the budget deficit primarily through new borrowings totaling ₦8.80 trillion, as well as ₦206.18 billion in privatization proceeds and ₦1.77 trillion in drawdowns on bilateral/multilateral loans secured for specific development projects/programs.
The DMO announced last month that it had raised ₦3.3 trillion from the domestic market to help finance the 2022 budget deficit.