President Muhammadu Buhari has ordered the payment of over N20 trillion borrowed from the Central Bank of Nigeria, CBN.
The administration has borrowed more from the apex bank through the Ways and Means window, W&M,than previous administrations in the country.
According to figures released by the bank in August, the Buhari administration borrowed N19.3 trillion from CBN in seven years, making the incumbent the highest borrower so far. The figure currently stands at N20.6 trillion according to checks by the magazine.
The breakdown of the administration’s W&M overdraft indicates that the government has borrowed more than N4 trillion from the apex bank this year alone, and the total overdraft may rise to over N22 trillion by December, according to financial experts.
Speaking during the 2023 Budget breakdown in Abuja, the nation’s capital Zainab Ahmed, the minister of Finance, Budget and Planning disclosed that the loan will now be redeemed through the issuance of government securities such as bonds and treasury bills.
Zainab said: “The total Ways and Means are N20 trillion, and President Muhammadu Buhari has approved securities. The securitisation will be over 40 years with an interest rate of nine percent.
“Over the years, we have been paying the interest component at the current rate that is charged on the Ways and Means.”
The administration has been trenchantly criticized for borrowing so much from the Godwin Emefiele-led CBN in contravention of the enabling Act which specifies that government borrowing from the bank should not exceed five percent of the yearly revenue and that such overdraft must be paid back within that budgetary year.
The Act says: “The total amount of such advances outstanding shall not at any time exceed five percent 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.”
Last year, the International Monetary Fund, IMF, cautioned the federal government to keep its borrowing from the Central Bank of Nigeria within legal limits.
The world financial body advised the government to moderate its borrowing from the CBN as well as strengthen budget planning and public finance management practices to allow for flexible financing from domestic markets and better integration of cash and debt management.
