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Government begins N445.8b domestic debt deals on January 18

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Director General of Debt Management Office (DMO), Dr. Abraham Nwankwo

Director General of Debt Management Office (DMO), Dr. Abraham Nwankwo

The Federal Government would begin its N445.8 billion domestic debt deals for the first quarter (Q1) by January 18.

The total would be a combination of bonds issuances- reopening of existing ones and a new issue worth N55 billion, as well as incremental Treasury Bills auction of N15.8 billion.

The move would sustain the already low money supply mode in the economy, aid fight against inflation and provide immediate cash for the government to implement its planned budget.

It would, however, increase cost of fund for private sector operators due to shortage of money supply among banks and lenders’ unwillingness to lend to the sector in preference to government’s risk-free securities.

The Central Bank of Nigeria’s treasury operations would redeem a total of N1.23 trillion in 91, 182 and 364 days securities and simultaneously roll the same back, with the addition of N15.8 billion in the period under review.

Nigeria plans to issue N340 billion to N430 billion ($1.12 billion to $1.41 billion) of local-currency bonds during the first quarter,

According to the Debt Management Office, the debt plan is targeted at a minimum of N340 billion and maximum of N430 billion ($1.12 billion to $1.41 billion) in domestic bonds.

A breakdown of the debt plan showed that government would auction between N110 billion and 140 billion worth of bonds maturing in 2021.

It will also auction between N85 billion and N105 billion in debt maturing in 2026, while N45 billion to N55 billion bonds maturing in 2027; and N100 billion to N130 billion of 2036 bonds would be auctioned too in the period.

In the 2017 budget under consideration, Nigeria is running a deficit plan of N2.36 trillion, hoping to raise its borrowings locally by N1.254 trillion, with the rest coming externally.

Meanwhile, with persistent and gradual gains in the last three months, the nation’s foreign exchange (forex) reserves have risen to six–month record high at $26.2 billion, after gaining $440 million in seven days.

The resurging reserves’ profile is raising the hopes for calm forex market activities in 2017, if the trend subsists, as it would curtail panic and speculative demands, which affect the naira value.

Specifically, in the last three weeks, the reserves have added about $1.2 billion, defying mounting pressure from demand and series of interventions through special auctions by the regulator in the last three months.

Three weeks ago, it gained $320 million, followed by a $420 million gain in the second week and now gain of $440 million.



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