The issuance of the final Nigerian Treasury Bills (NT-Bills) for 2023 confirms that the Federal Government has raised approximately N6.658 trillion through this debt instrument this year.
This figure marks a significant 40.4% increase compared to the N4.74 trillion garnered through NT-Bills in 2022.
Based on CBN data and tracked by Nairametrics, the total NT-bills subscription recorded in 2023 was N23.507 trillion.
Here is a monthly breakdown of the amount raised.
- In January, N277.468 billion was raised in two separate auctions which took place on January 11 and January 25.
- In February, N680.566 billion was raised in two auctions that took place on February 8 and February 22.
- In March, N631.838 billion was raised in three auctions that took place on March 8, 15, and 29.
- In April, N281.099 billion was raised in two separate auctions that took on April 12 and 26.
- In May, N324.428 billion was raised in two separate auctions on May 10 and 24.
- In June, N404.509 billion was raised in three separate auctions on June 7, 14, and 30.
- In July, N406.099 billion was raised in two auctions that took place on July 12 and 26.
- In August, N457.204 billion was raised in two auctions that took place on August 9 and 23.
- In September, N544.059 billion was raised in three auctions that took place on September 6, 13, and 28.
- In October, N406.896 billion was raised in two auctions that took place on October 11 and 25.
- In November, N1.059 trillion was raised in two auctions that took place on November 8 and 22.
- In December, N1.185 trillion was raised in three auctions that took place on December 6, 13 and 27.
What you should know
Theoretically, treasury bills are short-term government-backed securities issued by the Central Bank, used to raise funds, and as a monetary policy tool for controlling inflationary pressures.
However, this is a contrasting situation, in which the Nigerian government is achieving the highest-ever figure in treasury bill earnings while also recording its highest inflation rate since 2005.
In trying to explain the phenomenon, a banking expert noted, “Our inflation rate is caused by the exchange rate, so no amount of monetary policy can affect inflation.”
- Also corroborating this view, Dr Muda Yusuf, the Director General of the Centre for the Promotion of Private Entreprises, noted, “It is very difficult to draw a strong correlation between the treasury bills that have been issued and the inflation rate”, he added, “Summarily, the impact of monetary policy on inflation right now is very minimal.”
Essentially, treasury bills are used to mop up excess liquidity from the banking system to affect the demand side of inflation.
However, while it appears that the Nigerian scenario once again defies regular economic theories, there is a different outlook to it,
- Dr Muda noted, “If you compare these treasury bills to the injection of Ways and Means financing in the economy, the gap is still very huge.”
- He added, “The rate of liquidity growth emanating from Ways and Means is much higher than the treasury bills we’re talking about.”
Speaking about the key objectives of treasury bills, Dr Muda Yusuf noted that if the objective of the treasury bills were to mop up excess system liquidity, maybe, it could have an effect.
Then he noted that if the bills were issued for the objective of raising funds for government spending, then it is just cyclical liquidity which goes back into the system.
In the interplay between the amount raised from NT-bills, the inflation rate, and the current exchange rate, it is safe to assume that in the final months of the year, there has been an increase in foreign portfolio investors in Nigerian securities, hence even in local treasury bills.
According to the NGX, foreign portfolio participation in the NGX increased to 23.74% in November, the highest recorded in 2023.
This reflects an increased optimism in Naira-denominated securities, following efforts by the Yemi Cardoso-led CBN to clear FX backlogs and stabilize the exchange rate in line with market realities.
