By Peter Egwuatu & Jonah Nwokpoku
LAGOS — Nigeria Bureau of Statistics, NBS, yesterday, stated that the county’s trade deficit narrowed in the second quarter, 2Q, as value of exports surged by 63 per cent, after devaluation of the naira.
This came as the Federal Government said it planned to raise N120 billion in naira-denominated bonds at an auction on September 14, 2016.
The Debt Management Office, DMO, which stated this, yesterday, also disclosed that it would raise additional N40 billion each from debts 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 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.”