WEDNESDAY, 14 JULY 2010 01:20

 

Nigeria distributed N13.28 billion ($2.8 billion) from federation accounts to its three tiers of government last month but has not dipped into its windfall oil savings to do so, officials said on yesterday.

 

The amount distributed represents a 2.45 percent increase on May distributions and was funded partly by higher income from taxation, according to the Federation Accounts Allocation Committee, which is responsible for the disbursals. The monthly distributions, which have in the past been partly drawn from windfall oil savings, can have a major impact on liquidity in sub-Saharan Africa’s second-biggest economy, triggering shifts in bond yields and interbank rates.

 

Accountant General Ibrahim Dankwambo said the excess crude account, into which Nigeria saves oil revenues above a benchmark oil price, contained just under $4 billion, an increase of around 18 percent from a month ago. Dankwambo said the account contained $3.54 billion and N60.9 billion, which compares with about $3.2 billion and N29 billion in mid-June.

 

Traders said the June allocations would bring interbank lending rates back down after they spiked to around eight percent late last week and could have a temporary impact on bond yields.“We are now back to the boom and burst circle … We could see bond yields dropping by about 50 basis points next week but by the end of the week, it will be back up again,” one trader said, asking not to be named.

 

“By the time the money comes into the system … interbank rates will drop to an average of about 1.2 percent for secured fund from the present 8.0 percent,” he said.

 

(Source:BusinessDay)