FG to raise N235b from TB sales next week
The Federal Government of Nigeria through its central bank has concluded plans to raise no less than N234.89 billion ($765.99 million) from the sales of short-dated Treasury Bills (TB) at an auction a week from now, on April 6, 2017.
The Central Bank of Nigeria (CBN) on Wednesday disclosed that the federal government plans to sell N35billion of three-month debt, N33.49 billion of six-month bills and N166.40 billion of one-year notes, using a Dutch auction system. Payment will be due the day after the auction.
The apex bank issues treasury bills twice a month to finance the budget deficit, help manage commercial lenders’ liquidity and curb rising inflation.
The banks after its second Monetary Policy Committee (MPC) for the year retained benchmark interest rate at 14 percent; retain the Cash Reserve Ratio (CRR) at 22.5 per cent and also the Liquidity Ratio at 30 per cent over decline in inflation rate of 17.78 per cent in February.
Consequently, the Nigeria government in its last two auctions in March sold one-year treasury bills at yields above the prevailing inflation rate, in a bid to lure investors to buy more of the debt.
Nigeria at an auction on March 15, raised N213.75 billion ($681 million) from short-dated treasury bills, it sold N39 billion naira in three-month debt, N48.45 billion in six-month bills and N126.30 billion in one-year notes, using a Dutch auction system.
The fiscal authority with the support of the monetary authority expect 2017 budget deficit to widen to N2.36 trillion as it tries to spend its way out of a recession, with more than half the deficit to be funded through local borrowing.
However, the embattled largest economy in Africa is determined to emerge from its first recession in a quarter of a century this year and needs to put more effort in revamping its infrastructure, its budget minister said recently.
Udoma Udo Udoma said the economy was beginning to recover after it experienced a smaller contraction in the fourth quarter, although it was still in a recession.
The federal government, however, t issues treasury bills as part of a borrowing plan to finance part of the government budget deficit as well as to help manage liquidity in the banking system and curb inflationary growth.
