The Federal Government has been told that about 62 percent of government revenue by 2027 would be used to repay interests on loans taken from the Central Bank of Nigeria.
The World Bank made this disclosure in its recently released December 2022 edition of the Nigeria Development Update.
Investors King confirms that the Federal Government borrowed N6.31tn from the CBN through Ways and Means Advances in 10 months taking borrowings from N17.46tn in December 2021 to N23.77tn in October 2022.
The N23.77tn owed the apex bank by the Federal Government is not part of the country’s total public debt stock, which stood at N44.06tn in the third quarter of 2022, according to the Debt Management Office.
The World Bank Update read, “Despite the restructuring of the Ways and Means stock in 2023, interest payments are projected to steadily increase by 2.4 percentage points of GDP between 2018 and 2027, and by 2027 interest payments will account for over 62 per cent of revenues.”
The World Bank, in November 2022, had warned the Nigerian government against financing deficits by borrowing from the CBN through the Ways and Means Advances, stressing that the fiscal pressures on the country’s expenditures was excessive.
Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget and despite warnings from the World Bank, the Federal Government has continued borrowing from the CBN.
The Federal Government paid an interest of N2.03tn from January 2020 to November 2021 on the loans it got from the CBN through the Ways and Means Advances and Investors King can confirm that N405.93 billion were paid in interests on CBN loans between January 2022 and April 2022.
Meanwhile, the Senate has rejected the request of President Muhammadu Buhari to restructure the N23.7tn Ways and Means advances.
The request transmitted to the National Assembly was read by the President of the Senate, Ahmad Lawan and Speaker of the House of Representatives, Femi Gbajabiamila at plenary.
In the request titled ‘Restructuring of Ways and Means Advances,’ the President wrote, “The Ways and Means Advances by the Central Bank of Nigeria to the Federal Government has been a funding option to the Federal Government to cater for short-term or emergency finance to fund delayed government expected cash receipt of fiscal deficit.
“The Ways and Means balances as of 19th December, 2022, is N23,719,703,774,306.90. I have approved the securitisation of the Ways and Means balances along the following terms: amount, N23.7tn; tenure, 40 years; moratorium on principal repayment, 3 years; pricing interest rate, 9 per cent. Your concurrence and approval is sought to allow for the implementation of the same.”