• Friday, June 21, 2024
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CBN to issue N1.56trn in treasury bills in Q3 2024

Nigeria’s 1yr T-bill six times oversubscribed despite liquidity squeeze

The Central Bank of Nigeria (CBN) announced on Friday its plan to issue N1.56 trillion in treasury bills during the third quarter of 2024, matching the amount set to mature between June and August this year.

This information was revealed in Nigeria’s treasury bills programme calendar, published on the CBN’s website on May 31, 2024.

The amount to be offered in Q3 is 4.87 percent lower than N1.56 trillion issued in the second quarter of 2024.

A detailed breakdown of the upcoming treasury bills issuance shows that N170.85 billion will be allocated to 91-day tenors, N189.35 billion to 182-day tenors, and N1.20 trillion to 364-day tenors.

The CBN conducts bi-monthly treasury bills issuances to help the Federal Government finance its budget deficit, assist banks in managing system liquidity, and curb inflation.

Read also: FG pays N4.83trn of CBN Ways and Means advances with T-Bills, Bonds – Wale Edun

In April 2024, Nigeria’s inflation rate rose to 33.69 percent, the highest since September 2005, up from 33.20 percent in the previous month, according to CBN data.

In practical terms, the issuance of treasury bills affects households and individuals in various ways. Firstly, it influences interest rates on savings and investments. As the CBN issues treasury bills to regulate the money supply and manage inflation, the yields on these bills serve as benchmarks for other interest-bearing assets. Consequently, changes in treasury bill rates can impact the returns on savings accounts, fixed deposits, and other investments, thereby affecting the financial well-being of households.

Moreover, the issuance of treasury bills plays a crucial role in shaping the overall economic environment. By absorbing excess liquidity from the financial system, these bills help stabilise inflationary pressures and maintain price stability. This, in turn, fosters a conducive environment for sustainable economic growth. Additionally, treasury bill issuances serve as a means for the government to finance its budget deficit, supporting public spending initiatives and infrastructure development projects that contribute to economic expansion and job creation.

Read also: Stock market sheds N480bn on T-bills higher yields
However, it’s essential to recognise the potential challenges associated with high inflation rates, as observed in Nigeria’s recent economic landscape. Inflation erodes the purchasing power of consumers, making goods and services more expensive and diminishing the real value of savings.

“Therefore, while the CBN’s efforts to manage inflation through treasury bill issuances are commendable, addressing the root causes of inflation, such as supply chain disruptions and fiscal imbalances, remains crucial for fostering sustainable economic growth and improving living standards for all Nigerians,” investment banker said.

The CBN’s decision to issue N1.56 trillion in treasury bills in Q3 2024 underscores its commitment to maintaining macroeconomic stability and promoting financial resilience. However, the broader implications for households and the economy highlight the interconnectedness of monetary policy actions and their impact on everyday lives and long-term prosperity.