Tinubu’s govt serviced CBN loan with N912.32 billion in 3 months as debt profile hits N87trn

Findings show that the Nigerian Government paid an interest of N912.32 billion in the first three months of 2023 on the loans it obtained from the Central Bank of Nigeria (CBN).

The Budget Office revealed the amount in the 2023 Budget Implementation report for the first quarter. President Bola Tinubu and Governor of the Central Bank of Nigeria

Nigeria increases amount spent on servicing CBN loans

The amount spent paying interest on the loan is about 161.47% higher than the N348.92 billion spent in the same quarter last year.

According to reports, the Nigerian Government planned to spend N1.2 trillion on servicing the Ways and Means Advances from the CBN.

The development means that the Nigerian Government planned to spend about N300 billion every quarter servicing the loan. Punch reports that the Government has spent about 76.03% of its budget on the interests of the Ways and Means Advances.

The Ways and Means Advances is a loan facility used by the apex bank to finance the Government in moments of temporary budget shortfalls subject to limits allowed by law.

FG borrows from CBN in times of revenue shortfall

Section 38 of the CBN Act, 2007 says the apex bank may grant temporary advances to the Nigerian Government regarding budget revenue at such interest rate as the bank may deem fit.

“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 capped the loan limit at a five per cent limit. However, the Government of Muhammadu Buhari borrowed above the limit, leading to the National Assembly hurriedly amending the Act and increasing the limit from 5 to 15 per cent.

The lawmakers decided to increase the threshold as criticisms grew that the Government borrowed above the statutory limit.

It costs more to borrow from CBN

The Nigerian government disclosed that the money borrowed from the Central Bank of Nigeria (CBN) is the most expensive debt it is servicing., Legit.ng reported.

Presently, the government revealed it is servicing the N23 trillion loan borrowed from the CBN under the Ways and Means Advances, with over N2 trillion.

Olumide Ayodele, the technical adviser to the Director General of the Budget Office of the Federation, revealed this on Monday, September 4, 2023, in Abuja at the training of MDAs on 2024 Budget Preparation.