Balami Dahiru Hassan, a member of the revered Central Bank Monetary Policy has expressed concerns over the excessive borrowing by the Federal Government. His major concern is Government’s reliance on ways and means to borrow from the CBN.
He expressed concerns in the recently released personal statements of the members of the CBN monetary policy committee communique.
According to Balami,
The relationship between the Government and the CBN in terms of financing through ways and means need to be guarded because of the likely negative implications on the economy if not handled with care. The case study of other countries should be reviewed so that we do not fall into the Zimbabwean situation.
Ways and Means
Last December the former Central Bank Governor and Emir of Kano Sanisi Lamido Sanusi accused the CBN of contravening section 38.2 of the CBN act by borrowing more than the required threshold to the Federal Government. Section 38.2 of the act caps advances to the FGN at 5% of last year’s revenues.
According to CBN data, claims against the Federal Government in April was placed at about N6.5 trillion. Included in the amount are overdraft against the government of about N2.7 billion. Included in the overdraft is a sum of N220 billion as at April 2017, which they classified as Ways and Means. Nevertheless, this figure amounts to 10% of the N2.9 trillion in revenue generated by the FG in 2016.
Nigeria budgeted about N1.8 trillion in its 2017 budget for debt servicing and juxtaposed against a 2016 actual revenue of N2.9 trillion shows a debt service to revenue percentage of 62%.