The Nigerian Government has borrowed an additional N3.77trn from the Central Bank of Nigeria as of February 2023.
Credit to the FG through ways and means has consequently risen to N28.43trn by the end of February 2023, an increase of N3.77trn from the N24.65trn which it was in December 2022.
The development is based on THE WHISTLER analysis of CBN’s data on ‘Money and Credit Statistics’.
Ways and means is an avenue of funding by the apex bank when the FG is short of revenue. The CBN finance government deficit through Ways and Means Advances subject (in some cases) to the limits set by existing regulations.
The apex bank was under severe criticism last year over the ‘illegal’ funding of the FG through ways and means which is in contravention of the provision of the CBN Act 2007.
Section 38 of the CBN Act, 2007 provides that, “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 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 made pursuant to this section shall be repaid as soon as possible and shall in any event be repayable by the end of the Federal Government’s 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 years shall not be exercisable, unless the outstanding advances have been repaid;
“And in such form as the Bank may determine provided that no repayment shall take the form of a promissory note or such other promise to pay at a future date or securitisation by way of issuance of treasury bills, bonds, certificates or other forms of security, which is required to be underwritten by the Bank.”