The fiscal position of the Federal Government of Nigeria (FGN) is, not surprisingly, tight, as oil prices have crashed and economic growth has slowed down. As we describe below, being able to re-finance debt cheaply is critical to the FGN. So, the fact that Naira interest rates are so low (no government T-bill or bond …

When a currency is under pressure you expect interest rates to go up, and the long-term (we mean 10-year) lesson is that this generally happens in Nigeria. But is it not happening now. A huge amount of liquidity held by investing institutions (such as pension funds and mutual funds) is seeking a home. The result …

The confusing thing about oil prices is that, after the Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed to production cuts in mid-April, prices continued to fall for a further two weeks. Since late April the price of Brent crude has more than doubled. The reason for the continued fall during April was …

Last week the Central Bank of Nigeria (CBN) surprised the market by cutting its policy rate from 13.50% to 12.50%, a clear signal that it approves of market interest rates (see sidebar) that are all below inflation. The CBN’s idea is to avert a recession with a monetary stimulus after a weak GDP print (growth …

The Monetary Policy Council (MPC) of the Central Bank of Nigeria (CBN) meets this week to consider its policy rate and the overall direction of interest rates. As we pointed out last week, the upward movement in the CBN’s foreign exchange reserves, combined with the positive direction in oil prices and the stock market, gives …

The foreign exchange reserves of the Central Bank of Nigeria (CBN) are going up again. This is largely thanks to public-sector loans (such as the US$3.4bn facility granted recently by the IMF) to the government. It is tempting to see such loans as the building blocks of a bridge; this bridge takes the CBN’s FX …

Last week several countries, including Nigeria, announced a gradually loosening of lock-down restrictions associated with the COVID-19 pandemic. A gradual return to normal life is planned because it is feared that a full resumption of normal life could lead to a renewed outbreak of infections. Meanwhile, several international newspapers report on the curiously low impact …

Last we noted that the Central Bank of Nigeria (CBN) is in no hurry to raise market interest rates and that – most of the time – Nigeria’s commercial banks are liquid, usually reporting over N500.0bn (US$1.3bn) in total closing balances. This situation is consistent with a pro-growth policy, and indeed all market interest rates …

The Federal Government of Nigeria (FGN) is proposing a revised budget for 2020 which is designed to generate a deficit in the region of N5.2 trillion (US$13.5 billion), up from the previous estimate of N2.2 trillion. Normally one would expect the prospect of rising government debt to spur interest rate rises. But there appears to …