By this new debt plan, the central bank, The Guardian learnt, has a two-fold target of controlling the quantity of money in circulation (liquidity mop-up) and raising funds for budget implementation, through the new issuance of TB auctions.
By the debt calendar of the apex bank, the fourth quarter (Q4) deals are expected to kick off on September 15, with others following through December 1.Specifically, while about N96.6 billion worth of 91-day and 182-day treasury bills will be maturing and at the same time rolled over on September 15, a new issue of 364-day bill worth N86.7 billion would be auctioned simultaneously.
The national budget, which is the highest in history, is sitting atop a N2.2 trillion deficit, while government said it is raising N900 billion locally to fund it. According to the CBN’s plan, N264.47 billion would be offered for a 90-day bill; N204.88 billion for 180 days bill; and N482.69 billion will go for one-year paper.
The country sustained its debt programme throughout the third quarter, as the Debt Management Office, earlier in the period unveiled plans to raise between N305 billion and N395 billion in local currency-denominated bonds with maturities from five to 20 years.
Since then, the debt manager has been seen in the money market with several bonds auction and rounding off the quarter last Wednesday with N212.85 billion auction.It mobilised N45.85 billion in three-month paper at 14.38 per cent, against 14.99 per cent in the middle of August; N62 billion for six-month bills at 17.50 per cent, a marginal rise against 17.48 per cent previously; and N105 billion of one-year paper at 18.42 percent, against 18.50 per cent previously.
The auctions were marked by huge subscriptions, an indication of a gradual return of foreign investors, even as the interbank market for the first time after the exchange rate reform, recorded a $270 million inflow to fund naira debt investments.
Meanwhile, pending the expected improvement in oil revenues, the non-oil sector has become the driver of public spending. The new drive, witnessed in June, showed that about 70 per cent of the N559.03 billion sovereign revenue shared by the federal, states and councils in the month of June was generated from non-oil sources.
The Chief Executive Officer of Time Economics, Dr. Ogho Okiti, said the development marked a significant jump from the start of year, when non-oil revenues accounted for only 40 per cent of Nigeria’s statutory revenue and about zero per cent of the revenues shared among the three levels of government, when adjusted for VAT.
“However, despite improvements in non-oil revenues, there are still funding gaps in the planned budget,” he said.While the Federal Government has said it would issue a $1 billion Eurobond at unspecified time this quarter, there is also a $3 billion budget deficit financing expected from the World Bank and the African Development Bank).
But it is currently pursuing a highly controversial Communication Service Tax (CST), which if passed into law, will raise non-oil revenue profile by imposing a nine per cent charge on telecommunication subscribers on various services.
