FG spent N912.32bn to service CBN loan in three months

FG spent N912.32bn to service CBN loan in three months

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FG spent N912.32bn to service CBN loan in three months

Central Bank of Nigeria

FG spent N912.32bn to service CBN loan in three months. According to Saturday PUNCH findings, the Federal Government paid N912.32 billion in interest on loans obtained from the Central Bank of Nigeria through Ways and Means Advances in the first quarter of 2023.

This sum was reported in the Federation’s Budget Office’s Q1 Budget Implementation Report for 2023.

The amount paid on loan interest is 161.47% greater than the N348.92bn spent in the same quarter of 2022.

Saturday PUNCH previously revealed that the Federal Government expected to spend N1.2tn servicing loans obtained from the CBN through Ways and Means Advances.

This meant that the government planned to spend about N300bn quarterly.

However, it had spent about 76.03 per cent of its budget for the interests on the ways and means advances.

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 apex bank may grant temporary advances to the Federal Government with regard to temporary deficiency of budget revenue at such rate of interest as the bank may determine.

The Act read in part, “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.”

The Act placed a limit of five per cent on how much the Federal Government could borrow, although the previous administration severely violated the limit.

However, the House of Representatives of the 9th National Assembly, amid protest, approved an amendment to the CBN Act, raising the ceiling of Ways and Means Advances from the apex bank from five to 15 per cent of the Federal Government’s previous year’s revenue.

(FG) The House gave the approval at an emergency sitting, in concurrence with the Senate, which held an emergency plenary to consider and approve some economic bills.

The National Assembly made the move amid criticisms that the Federal Government (FG) had obtained WMAs beyond the five per cent threshold of the CBN.


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