Nigeria reduces inflation to 15.74 in 2017, sells N130bn bonds next week

As part of its continued effort to ensure improved economic growth and achieve a market-determined exchange rate regime, the Economic Recovery and Growth Plan 2017-2020 has said that Nigeria sees 2017 inflation at 15.74 percent, and at 12.42 percent next year.

This is even as the federal government through the Debt Management Office on Tuesday said that plans have been concluded to raise N130 billion ($427m) from its third debt sale this year next week Wednesday precisely, which would be on March 15, 2017.

With the official economic plan released on Tuesday, there are indications that there is mounting pressure to let the naira float freely.

Also, the government will also review and possibly remove a ban on accessing foreign exchange for 41 goods and services.

However, the debt office said it would issue 45 billion naira in bonds due in 2021, 50 billion naira maturing in 2027, and 35 billion naira due 2036, using the Dutch auction system which begins with a high asking price that is lowered until the bond is sold.

Settlement is expected on the day following the issue. The bonds are reopening of previous issues, except the 2027 which is a new issue.

Africa’s biggest economy auctions sovereign bonds monthly to help fund its budget deficit, support the local debt market and to maintain a benchmark for companies to follow.

Nigeria expects a 2.36 trillion naira budget deficit for 2017, with half of it funded through domestic borrowing.

Similarly, federal government is also planning to sell 1.13 trillion naira ($3.70b) worth of treasury bills between March 16 and 1 June, a Central Bank debt calendar showed.

The bank aims to auction 243 billion naira in 91-day bills, 198 billion in 182-day and 689 billion in 364-day debt.

The central bank sells treasury bills twice a month to help fund the government’s budget deficit and support commercial banks in managing liquidity.

Nigeria expects a 2.36 trillion naira budget deficit for 2017, with half of it funded through domestic borrowings.
Meanwhile, Nigeria’s central bank provided on Monday $367 million to the interbank foreign exchange market at forward rates, it said in a statement.

The apex bank said it sold $144 million for 45-day forward contracts and $223 million for 60-day contracts – part of a pattern of such sales in recent weeks.

The move “was in line with the bank’s determination to ease the foreign exchange pressure on various sectors through forward sales under the new flexible foreign exchange regime”, the statement said.

Nigeria’s interbank forex market traded $540,000 in early deals at 375 naira per dollar, near a record low exchange rate hit last November, Thomson Reuters data showed on Monday.

In February the central bank effectively devalued the naira for private individuals, offering to sell them the currency at around half the premium charged at the black market, in a bid to narrow the spread on the unofficial market.