Interbank rates to move in mixed directions on marginal inflow of matured bills

THERE are expectations that interbank rates would move in mixed directions amid marginal inflow of matured bills.

Dealers said Open Market Operation (OMO) worth N20 billion would mature via the secondary market while the Nigeria Treasury Bills (NTB) worth of N12.66 billion would also mature this week.

Meanwhile, in assessing Nigeria’s debt sustainability, analysts at Afrinvest (West) Africa estimate that debt-to-GDP ratio rose to 23.3 per cent in the first quarter of 2022 (previously 22.8 per cent).

This, they said, is below Debt Management Office’s (DMO’s) sustainable benchmark (40.0 per cent of GDP) and IMF’s threshold for emerging economies (55.0 per cent of GDP).

Notwithstanding, the analysts frowned at the persistent build up in public debt (up 2.4x since 2016) describing it as worrisome given revenue underperformance (2021 Actual – ₦4.4 trillion vs 2021 Budgeted – ₦8.1 trillion).

Also, the nation’s fiscal position worsened as fiscal deficit-to-GDP is estimated to rise to 4.0 per cent in Q1:2022 (previously 3.4 per cent) on account of slower economic growth and an uptick in fiscal deficit.

On the other hand, debt-to-revenue ratio is estimated at 893.1 per cent in Q1:2022 slightly lower than the Financial Year (FY):2021 level (899.5 per cent).

Likewise, the estimate of debt service-to-revenue moderated to about 85.8 per cent over the past four quarters (previously: 96.0 per cent) due to modest improvement in non-oil receipts.

“Although both debt-to-revenue and debt service-to-revenue ratios improved, the metrics continue to teeter in a precarious zone as almost all of FG’s revenue is deployed towards debt servicing,” the analysts stated in a note to clients.