The Federal Government says it will henceforth be borrowing less in naira and more in foreign currency.
Finance Minister Kemi Adeosun told State House reporters that this was based on a restructured debt profile approved yesterday by the Federal Executive Council.
According to the minister, it is cheaper to borrow in dollars than in the naira.
Adeosun said this would enable the private sector to borrow and create more jobs.
She said: "We got an approval in June to restructure our debt profile. We will borrow less in naira and more in foreign currency because it's cheaper and we want to prevent crowding out the private sector, we want to create room for the private sector so that they can borrow and create more jobs. So, as part of that, we sought approval and that was granted for us to refinance treasury bills.
"We will finance treasury bills, as treasury bills mature, we will be financing them in dollars.Up to $3 billion worth of treasury bills will be refinanced into dollars. As the naira treasury bills mature, we will be issuing dollar instrument. We are not increasing our borrowings, we are simply restructuring, instead of owing naira, we will be owing dollars and the advantage to that one is cost reduction, the average rate we borrow internationally doesn't exceed 7%.
"Our treasury bills were paying between 13.6 and 18.5% They are almost halving the cost of borrowing. We are trying to relieve the pressure on debt services . As you know, there are a lot of controversies that our debt profile is very high and one of the things we are trying to do to relieve is to refinance.
"The second thing to extend the maturity, all our treasury bills mature maximum 364 days. We will be taking that borrowing to 3 years and the expectation is that as the economy recovers and grows, we will be in a much better position to repay instead of rolling over the debt which we are doing at the moment.
"The third thing is that by reducing government borrowing to the tune of $3bn, we create more room for banks to lend to the private sector and hopefully that will also create some downward pressure on the interest rate. We want to borrow as much in naira and hopefully that will begin to put pressure on the interest rate which we will agree have to come down. So, that was the approval that was given and that is part of our overall strategy which aims to reduce borrowing."