The federal government borrowed N6.3 trillion from the Central Bank of Nigeria (CBN) in the first 10 months of 2022 (January- October), data from the apex bank shows.
The federal government has been borrowing from the CBN through “Ways and Means Advances”.
Ways and Means is a loan facility through which the CBN finances the government’s budget shortfalls.
The data, obtained from CBN’s website, showed that the Ways and Means’ debt climbed from N17.5 trillion in December 2021 to N23.8 trillion in October 2022 – an increase of N6.3 trillion in 10 months.
Analysis by TheCable Index shows that the federal government borrowed N704.3 billion from the CBN in January, N226.3 billion in February, N507.7 billion in March, and N112.3 billion in April.
It also borrowed N569.6 billion in May, N335.8 billion in June, N695.2 billion in July, N1.46 trillion in August, N749.4 billion in September, and N957.2 billion in October.
These borrowings are currently not included in the country’s total public debt stock (federal and state governments) which currently stands at N42.84 trillion.
Section 38 of the CBN Act, 2007, stipulates that the total amount of Ways and Means Advances outstanding shall not at any time exceed 5 percent of the previous year’s actual revenue of the federal government.
But the federal government’s borrowings from the apex bank has repeatedly exceeded the 5 percent threshold.
“All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the federal government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid,” the act reads in part.
In a statement on its website, the CBN said financing government deficit through Ways and Means Advances could frustrate its efforts in pursuing its monetary policy.
“The direct consequence of central banks’ financing of deficits are distortions or surges in the monetary base, leading to adverse effects on domestic prices and exchange rates i.e macroeconomic instability because of excess liquidity that has been injected into the economy,” CBN explained.
Multilateral organisations such as the International Monetary Fund (IMF) and the World Bank have repeatedly advised the federal government to cut back on its request for loans from the CBN.
Meanwhile, the federal government, in October, announced plans to repay the debt owed to the CBN with securities such as treasury bills and bonds issuance.
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