Liquidity: CBN Targets N2.20trn Treasury Bills Issuance In Q4

The Central Bank of Nigeria (CBN) on Tuesday announced its plan to issue N2.20 trillion in treasury bills during the fourth quarter (Q4) of 2024, matching the amount set to mature from September to November this year.

The planned issuance was revealed in Nigeria’s treasury bills programme calendar, published on the CBN’s website on August 27, 2024.

The amount to be offered in Q4 is 41.03 percent higher than N1.56 trillion issued in the preceding (third) quarter of 2024.

A detailed breakdown of the upcoming treasury bills issuance shows that N158.79 billion will be allocated to 91-day tenors, which is lower than N170.85 billion allocated in the Q3, 2024. Also, a total of N109.61 billion will be issued for 182-day tenors, lower than N189.35 billion in the preceding quarter, and N1.94 trillion will be allocated for 364-day tenors, higher than N1.20 trillion allocated in Q3 2024.

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.

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In July 2024, the headline inflation rate eased to 33.40 percent relative to the June 2024 headline inflation rate of 34.19 percent, according to the National Bureau of Statistics (NBS).

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.

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 N2.20 trillion in treasury bills in Q4 2024 underlines 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.