The Central Bank of Nigeria (CBN) has announced its intention to reissue treasury bills worth 2.2 trillion naira (approximately $1.383 billion) during the fourth quarter of 2024.

This massive reissue, a direct response to the country's current economic challenges, aims to manage liquidity in the financial market while stabilizing the naira, the local currency.

Faced with galloping inflation, the CBN opted for a strict monetary policy by increasing interest rates on Treasuries, which reached 21.49% for 364-day bonds in the first half of 2024 compared to around 15 to 18% at the end of 2023. This approach, whose objective is to absorb excess liquidity, significantly increases the cost of public debt. As a result, the Central Bank disbursed 1.55 trillion naira in interest payments in the first six months of the year, a dramatic increase of 654.7%

By renewing these Treasuries at high rates, the CBN seeks not only to maintain the interest of local and foreign investors, but also to protect the national currency from inflationary pressures. In August 2024, the inflation rate, which stood at 33.4%, marked a slight decrease compared to previous months, but remained well above the CBN's objectives. However, this strategic choice is not without risks, as it imposes additional pressure on public finances, which are already weakened by falling tax revenues and an economy facing numerous structural challenges

In addition, real interest rates, calculated by subtracting the inflation rate from the nominal rate, always remain in negative territory. 364-day Treasury bills are -11.91%, and the key rate is -6.65%. This means that investor returns are eroded by inflation, which can discourage savings and investments in Naira, and exacerbate capital flight as well as pressure on the currency