By Fola James
The federal government’s borrowing from the Central Bank of Nigeria, CBN has reached an alarming level, as latest figures indicate that the Buhari administration has taken an overdraft from the apex bank more than any previous administrations.
From barely N700 billion when Buhari came to power in 2015, the figure has risen astronomically to over N15 trillion in just six years. what that means is that the Buhari government has borrowed over N14 trillion from the CBN since he came to power.
The development has even become more worrisome following allegations that the administration has been abusing the W&M.
The Ways and Means, according to the CBN Act is an avenue whereby the federal government borrows from the CBN to finance budget deficit. But the same Act provides that the overdraft should not exceed five per cent and must be paid within the budgetary year.
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.”
That obviously, analysts of the apex bank said, is where the administration has failed considering that the federal government’s overdraft has risen to as much as 80 per cent of the yearly budget since Buhari came to power, according to reports from the Godwin Emefiele-led bank.
The situation has raised more concerns among Nigerians who said the nation’s total debt stock has risen to over N48 trillion since Buhari came to power in 2015.
According to figures provided by the Debt Management Office, DMO the total debt by 36 state governments and federal government stands at over N33 trillion. If added to the CBN overdraft, the total debt stock now stands at over N48 trillion.
But this seems not to be the concern to the administration following President Buhari’s comment that his government will borrow more to finance critical infrastructure in the country, and that he’s prepared to go to jail if the need arose.
In an audio interview recorded just before the 2019 presidential election, the Minister of Transportation Rotimi Amaechi said the president was adamant about taking loans and had vowed to go to jail over the same issue.
Amaechi said “And I like the president’s disposition. He says, ‘let’s borrow it. They can say whatever they like. When we finish, once we are borrowing to the infrastructure, and we finish developing, Amaechi, don’t worry. I’ll go to jail on your behalf. You won’t go to jail.”
In the first six months of this year, the Federal Government borrowed N2.4trillion from the CBN, more than half of what it got in the whole of last year.
The N2.4trillion is also much higher than five per cent of the Federal Government’s retained revenue of N3.9trillion in the previous year.
As of June 2015, the total government borrowing from the apex bank stood at N648.26billion. It jumped from N856.33billion in December 2015 to N2.23trillion in December 2016, the CBN data show.
The total borrowing from the bank grew by N1.08 trillion in 2017 to N3.31tn. It rose further by N2.1tn in 2018 to N5.41trillion. It surged by 61.18 per cent (N3.31trillion) to N8.72trillion at the end of 2019.
Last year, the government turned to the apex bank for a record N4.9trillion to plug its fiscal financing gap, bringing its total borrowing to N13.11trillion as of December 2020.
