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TSA policy raises deposits in CBN to N7.8trn

CBNThe Single Treasury Account (TSA) policy in October 2015 has increased the total deposits at the Central Bank of Nigeria (CBN) to N7.8 trillion, indicating an increase of 6.5 percent above the level at the end of the preceding month.

The development reflected the increase in deposits of the Federal Government. Of the total deposits at CBN, the share of the banks 51.2 percent, the Federal Government 43.2 percent and the private sector was 5.6 percent.

Meanwhile, currency-in-circulation fell by 4.7 percent to N1.6 trillion in the review month, in contrast to the 6.0 percent increase at the end of the preceding month. The development was due, largely, to the fall in currency outside banks’ component.

Reserve money (RM) fell by 4.2 percent to N5,546.54 billion at the end of the review month, reflecting the decline in banks’ reserves with the CBN.

However, money market rates moved in tandem with the liquidity condition in the month under review. Contrary to expectations of liquidity squeeze following the implementation of the TSA in September, the money market was awash with liquidity arising from the payment of Cash Reserve Requirement (CRR) amounting to N740.88 billion on October 7, 2015.

Consequently, short-term interest rates (particularly Open Buy Back (OBB) and Overnight) trended below the Monetary Policy Rate (MPR). Both short- and long-term FGN debt instruments were issued at the primary market.

Government domestic borrowings moderated liquidity in the system as NTBs and FGN Bonds amounting to N265.25 billion and N80 billion, respectively, were sold.

Available data from the CBN’s economic report for the month of October, 2015 indicated that total assets and liabilities of the commercial banks amounted to N27,263.87 billion, showing a decline of 3.2 per cent, relative to the level at the end of the preceding month. Funds were sourced mainly from drawdown on reserves and sale of unclassified assets. The funds were used, largely, to liquidate Federal Government deposits and demand deposits.

At N499.37 billion, federally-collected revenue (gross) in October 2015, was lower than both the monthly budget estimate and the receipt in the preceding month by 38.7 per cent and 6.3 per cent, respectively. The fall in federally-collected revenue (gross) relative to the monthly budget estimate was attributed to the shortfall in receipts from oil and non-oil revenue, during the review month.