The Debt Management Office (DMO) which stated this yesterday also
disclosed that it will raise additional N40 billion each from debt maturing in
2021, 2026 and 2036, using the Dutch auction system. These form part of the
government’s plan to borrow around N900 billion from the local debt market this
year to fund a budget deficit projected at N2.2 trillion.
Meanwhile, exports increased 63
percent to 1.9 trillion naira in the quarter, while the trade deficit narrowed
by 44 percent to N196.5 billion ($622 million) in the three months through June
compared with 351.3 billion naira in the previous three-month period.
According to NBS, “The improvement in export value is largely due to the
depreciation in the value of the naira. The total value of trade in the West
African country increased to N3.94 trillion in the second quarter from N2.7
trillion.”
It explained that total trade
between April and June stood at N3.94 trillion, up 49 per cent from the three
months to March, adding that the exports were dominated by crude oil, which
contributed 79.7 per cent of total exports of N1.87 billion.
It also said that imports rose 38.1
per cent in the second quarter to N2.07 billion with the bulk of Nigeria’s
imports consisting of machinery and appliances, vehicles and aircraft parts and
petroleum products, which came mostly from China, Netherlands, United States
and India while noting that intra African imports accounted for only 4.3 per
cent of the total.
It will be recalled that the Central Bank of Nigeria (CBN) removed a
peg of 197-199 per dollar on June 20 in a move to end a foreign-currency
scarcity that curbed imports and crippled production for more than a year. The
move caused the naira to lose more than a third of its value. The nation’s
gross domestic product contracted by 2.1 percent in the three months through
June from a year earlier, while inflation accelerated to 17.1 percent in July,
the highest rate since October 2005. Nigeria recorded its first trade deficit
in five years during the first quarter.
“Whenever
there is a devaluation of the currency, it encourages exporters because they
get more naira for the goods sold at the international market or priced in
dollar,” Opeyemi Oguntade,
analyst at Lagos-based Financial
Derivatives Company Limited has said. “For the
country and the exporter, the thing to consider is if the benefit of the
devaluation is high enough to outweigh the cost of rising inflation.” (Vanguard)
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