The Federal Government’s total borrowing from the Central Bank of Nigeria through Ways and Means Advances has exceeded to N15.51tn, rising by 2,286 per cent in six years, data collated from the CBN have shown.
The N15.51tn owed by the Federal Government to the central bank is not part of the country’s total public debt stock, which stood at N33.11tn as of March 2021, according to the Debt Management Office.
The public debt stock comprises the debts of the Federal Government of Nigeria, the 36 state governments and the Federal Capital Territory.
Ways and Means Advances is a loan facility used by the central bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law.
According to Section 38 of the CBN Act, 2007, the bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate of interest as the bank may determine.
The Act says, “The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government.
“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.”
In the first six months of this year, the Federal Government borrowed N2.4tn from the CBN, more than half of what it got in the whole of last year.
The N2.4tn is also much higher than five per cent of the Federal Government’s retained revenue of N3.9tn in the previous year.