CBN to raise N22 billion debt for government in three months

CBN building

Beginning this week till August 31, the Central Bank of Nigeria (CBN) will raise N22.3 billion for the government through its debt issuance instrument- Nigerian Treasury Bills (NTBs).

The amount represents an increase of 14.6 per cent on N152.3 billion maturing NTB that would be rolled over simultaneously, but now at N174.6 billion.

The development would similarly raise Nigeria’s debt service bill from the domestic side despite the faltering revenue flow.

Besides, the twice-monthly treasury bills auctions form part of strategies to fund government’s yearly budget deficit, as well as veritable tool in the management of the quantity of money in circulation.

According to the Debt Management Office (DMO), the country’s domestic debt, made up of states and the Federal Government is estimated at N14.9 trillion as at March 31, 2017, with about N474.1 billion already paid out as interest in the first three months of the year- N180.1 billion in January; N106.4 billion in February; and N186.9 billion in March.

Of the N19.15 trillion total debt captured by DMO at the end of the first quarter this year, NTBs accumulated at N3.6 trillion; Treasury Bonds, N190.9 billion; and the recently inaugurated FGN Savings Bond, N2.1 billion, representing 30.1 per cent; 1.6 per cent; and 0.02 per cent of total domestic debt respectively.

But the apex bank’s NTB programme for the third quarter is targeting N1.24 trillion (about $4.1 billion at N304.5 per dollar) from June 15.

Specifically, CBN is targeting N226.6 billion in 91-day bills; N311.3 billion for N182-day; and N698.64 billion in 364-day debt under the NTBs’ maturity-rollover plan.

Within the three-month period, a cumulative of N198 billion under the 182-day treasury bills would at one point or the other not be due for maturity.

By the end of third quarter, NTBs of various maturity dates would settle at N3.7 trillion, against N3.6 trillion as at March 31, 2017.

The Chief Executive Officer of Financial Derivatives Limited, Bismarck Rewane, said he is not concerned about the size of the debts, because borrowing is not totally wrong.

“I am concerned about the interest payment burden, considering our revenue challenge, which represents about 66 per cent and more concerned about the uses of the borrowed funds.

“If the cost of borrowing is this high and also used on consumptions, then the burden becomes excruciating. Of course, we would remain where we are in terms of development and worse still, mortgage the future,” he said.

The country is currently struggling with recession after decades due to global oil price volatility, high dependency on the commodity’s earnings and huge import of virtually every goods and services.