Good news as FG settles important debt with a domestic creditor

The Nigerian government has allocated about N4.83 trillion from the earnings of Nigerian Treasury Bills (NTBs) and Bonds issued in 2024 to settle the Ways and Means advances from the Central Bank of Nigeria (CBN).

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said this during his presentation at the Lagos Business School Breakfast Club.

FG obtains N2.94trn loan from CBN

In 2023, the Nigerian government obtained about N2.94 trillion from the apex bank via the Ways and Means advances to service domestic debts.

According to reports, the Nigerian government has resorted to using proceeds from public domestic debt obtained via Bonds and NTBs to repay a substantial part of the CBN’s Ways and Means advances.

Edun stated that the government’s securities increasingly attract investors due to CBN’s high-interest rates.

He stated that CBN’s defence of the naira is projected to lead to a great interest payout, with the apex bank set to incur about N1,01 trillion.

Investors oversubscribe Nigeria's T-Bills

The minister noted that the total subscription for Q1 2024 stood at about N21.17 trillion, stressing that the rebound of the Nigerian currency caused the high demand for government securities.

CBN recently revealed that it received over 75% of the bids during the auction of government securities on March 1 and 6, 2024, which came from foreign investors.

This reflects a rising interest in Nigeria’s financial instruments. Ways and Means advance enable the government to secure short-term or emergency financing from the CBN to address cash shortfalls.

In March last year, the national assembly securitised about N22.7 trillion CBN Ways and Means advances from the N23.3 trillion previously received from the apex bank to the Nigerian government.

The securitised debt was later transferred to the Debt Management Office (DMO) with a 40-year tenor, a three-year moratorium, and a nine-percent interest rate.

Nigeria successfully repays Chinese, World Bank loans

Legit.ng previously reported that Nigeria spent about 277.64% on external debt servicing in Q3 of 2023, according to data from the Debt Management Office (DMO).

An analysis of the data indicates that external debt servicing stood at $368.26 million in the second quarter of 2023.

The figure increased to $1.39 billion, showing a 277.64% rise in the three months under review.