June 23, 2020/Coronation Weekly

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 on page 2, 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 yield exceeds the rate of inflation) enables the FGN to issue its debt cheaply to the private sector. The market is taking up the slack, and it is difficult to find an inflation-beating investment.

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