Available data from the Central Bank of Nigeria shows the government via the CBN has sold about N3.1 trillion in treasury bills between January 2017 and July 2017. This is the highest we have seen at this time of the year since we started tracking this data in 2013.
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Government borrowing has sky rocketed this year as oil revenues dip and the country strives to dig out of its greatest economic crisis in over 2 decades. To address revenue shortfalls, the government has resorted to borrowing in the domestic market often at exorbitant rates.
Nigeria on Wednesday sold about N204.9 billion in treasury bills raising total sales this month alone to N381.9 billion. CBN plans to borrow about N1.2 trillion in the second quarter of 2017 alone, which will could take Nigeria’s treasury bills purchases to over N4 trillion by the end of September 2017.
Average 364 days treasury bills yield has topped 20% this year following the CBN’s intent to hold the stabilize the exchange rate and fend off speculators. A higher interest rates means fewer naira chasing dollars, a strategy used by economist to ward off speculators. The CBN is also thought to be keeping rates high to continue to attract foreign investors into the country.
Total treasury bills sales in the whole of 2016 was about N4.3 trillion. Total treasury bills purchases did not breach N4 trillion between 2013 and 2015. In fact, the CBN sold N3.4 trillion, N3.4 trillion and N3.8 trillion in 2013, 2014 and 2015 respectively. The CBN sold over N2.7 trillion in the first half of 2016 alone.
Another auction is set for the 3rd and 17th of August 2017 to end its treasury bills calendar for the third quarter. It expects to sell another N290 billion in August alone.