In a strategic move to tackle Nigeria’s persistent inflation and stabilize the economy, the Central Bank of Nigeria (CBN) has announced plans to issue a substantial N1.64 trillion in Treasury Bills (TBs) during the second quarter of 2024. This action is part of the bank’s ongoing efforts to manage the nation’s financial system and curb rising inflation.
Treasury Bills, which are short-term government securities with maturities of under one year, are employed by the CBN to raise funds on behalf of the Federal Government. The issuance of TBs is not only a means for government financing but also serves as a critical tool for regulating the nation’s money supply. By adjusting the amount of money in circulation, the CBN can directly influence inflationary pressures.
The Treasury Bills programme is slated to begin on March 7, 2024, and run through May 23, 2024. The breakdown of the planned issuance reveals a careful distribution of TBs across various time frames:
- N414.29 billion worth of 91-day TBs
- N43.74 billion worth of 182-day TBs
- N1.18 trillion worth of 364-day TBs.
This distribution reflects the CBN’s strategy to diversify the maturities of its debt instruments to meet various market needs while controlling the overall money supply.
The first phase of the programme will take place in March, when the CBN intends to sell a total of N660.62 billion in TBs. The breakdown for March includes:
- N32.73 billion in 91-day bills
- N12.97 billion in 182-day bills
- N614.92 billion in 364-day bills.
In April, the CBN will offer N292.17 billion worth of TBs, including:
- N10.61 billion for 91-day bills
- N15.97 billion for 182-day bills
- N265.59 billion for 364-day bills.
The largest portion of the sales will occur in May, with the CBN set to offer N688.3 billion in TBs, broken down into:
- N362.9 billion for 91-day bills
- N14.7 billion for 182-day bills
- N302.67 billion for 364-day bills.
This issuance program comes in response to rising inflation rates in Nigeria, with headline inflation reaching a staggering 29.9% as of January 2024, and food inflation climbing to 35.41%. The CBN has taken several bold actions to counteract these soaring prices, including an aggressive interest rate hike from 18.75% to 22.75% during its latest Monetary Policy Committee (MPC) meeting. This hike reflects the bank’s determination to control inflation, stabilize the local currency, and encourage savings in the face of economic challenges.
The CBN’s comprehensive approach highlights its commitment to addressing the nation’s economic difficulties and ensuring a path toward sustainable growth. By utilizing Treasury Bills as a monetary policy tool, the CBN aims to rein in inflation, manage liquidity in the market, and restore confidence in the country’s economic outlook.
