The Central Bank of Nigeria (CBN) under the ways and means financing advanced N6.2 trillion to the Federal Government (FG) to bring the total debt of the FG to CBN to N23.3 trillion at the end of 2022.
This is according to data contained in the 2022 audited financial statement of the apex bank released on Thursday.
According to the report, the FG debt which stood at N17.1 trillion at the end of 2021, increased by 36% to 23.3 trillion at the end of the 2022 FY.
FG heavily indebted to CBN
Nairametrics review also revealed that the FG debt accounted for a remarkable 72% of the total loans and receivables in the CBN’s balance sheet according to the audited Financial Statement for 2022.
Recall in January 2022, the former senate president Ahmed Lawan had said that the senate was committed to finding ways to reduce Nigeria’s along with the FG and the revenue generation agencies.
Also, in October 2022, the former Finance Minister Mrs Zainab Lawal hinted at the FG’s plans to restructure the country’s debt profile by considering Eurobonds at cheaper rates in 2023.
Meanwhile, between May 3 and 4, 2023, both houses of the National Assembly approved the securitization of N22.7 trillion of the N23.3 trillion advanced by the CBN to FG as ways and means with the debt transferred to the Debt Management Office (DMO) with a 40-year tenor and a 3-year moratorium at an interest rate of 9%.
In a notable move with far-reaching implications for Nigeria’s fiscal landscape, the National Assembly approved a substantial increase of the “Ways and Means” ceiling.
The ceiling, which serves as a critical financial mechanism for government operations, was elevated from 5% to an impactful 15%.
What you should know
The Ways and Means provision allows the government to borrow from the Central Bank of Nigeria (CBN) if it needs short-term or emergency finance to fund delayed government expected cash receipts.
However, the provisions in the act set a limit on the financing of fiscal deficits at 5% of the prior year’s revenues.
Nevertheless, the government has breached this position over the years, but to legalize the breach, the then Buhari government presented a bill to the national assembly to approve the conversion of the loan into a national debt.
The National Assembly had in May 2023, in an emergency plenary session amended the CBN Act to increase the total CBN advances (Ways and Means provision) to the Federal Government from 5% to a maximum of 15%.
The quest to increase it to 15% allows even more borrowing and more debt service obligations for the future generation of the country.
