FG incurred N1.799trn domestic debt charges in 2018 — CBN report

The cost of domestic debt instruments issued by the Federal Government stood at N1.799trillion as at December 2018, representing an increase of N344.21bn or 23.65 per cent, over the N1.455trn at December 2017, the Central Bank of Nigeria Financial Markets Department annual activity report has shown.

The report released yesterday said the “increase in the cost of debt servicing in 2018 was attributable to the coupon payments of new instruments (such as FGN Sukuk, Green bonds and FGN savings bonds) that formed part of the debt stock.”

A breakdown of the cost in 2018 depicted that FGN Bonds coupon payments (including special Bonds) accounted for N1.118trn or 62.16 per cent, while interest on Non-Tariff Barriers (NTBs) stood at N640.68 billion or 35.60 per cent.

It added that floating rate notes Treasury Bonds was N23.84 billion or 1.32 per cent, while FGN Sukuk constituted the balance of N16.47 billion or 0.92 per cent.

The report said the stock of FGN domestic debt outstanding, amounted to N12,443trn at December 2018.

It said this represented a decrease of N146.35 billion or 1.16 per cent below the N12.589trn at end-December 2017.

The report indicated that the gradual reduction of domestic debt was partly as a result of the redemption of NTBs worth N78.05 billion in December 2018 from the proceeds of the Eurobonds.

On the inter-bank foreign exchange market, the report said in 2018, the CBN maintained its direct intervention in the inter-bank foreign exchange market to cushion demand pressure and ensure exchange rate stability.

Consequently, total spot sale was $25.677bn while forwards sales amounted to $11.054bn. the report said these spot sales comprised $3.453bn at the interbank, $1.581bn for invisibles, $1.315bn for SMEs and $8.272bn at the Investors’ and Exporters’ (I & E).

On the other hand, the report said the CBN purchased $7.802bn at the interbank market. Thus, net sales by the bank amounted to $17.874bn.

It said the sum of $10.400bn matured at the forwards segment, while $2.760bn remained outstanding at end-December 2018.

In the preceding year, the CBN said the total sales was $15.816.06bn, comprising $4.617bn as spot and $11.199bn as forward transactions. In the same vein, the bank purchased $6.090bn, resulting in a net sale of $9.725bn. The sum of $10.731bn matured at the forwards, while $1.921bn remained outstanding at end-December 2017.

The increased volume of transactions in 2018 was attributable largely to the CBN’s foreign exchange policy and its management, coupled with the improvement in the levels of foreign reserves during the year, the report indicated.