A total of N4.12tn was paid in interest by the Federal government between 2019 and 2022 on the loans got from the Central Bank of Nigeria through Ways and Means Advances.
Data from the Medium-Term Expenditure Framework and Fiscal Strategy Papers and the public presentation documents of the approved budgets by the Ministry of Finance, Budget and National Planning showed that in 2019, the interest paid on the CBN loans was N339.45bn which rose to N912.57bn in 2020 and N1.22tn in 2021.
For 2022, Investors King understands that data for December 2022 was yet to be released but data for January to November 2022 is made available to the public.
Investors King can also confirm that the interest payments hit N1.64tn in 2022, indicating the payments rose by 384.14 per cent between 2019 and 2022.
The Ways and Means Advances is a loan facility used by the central bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law.
The Federal Government loan procurement from the CBN is in line with Section 38 of the CBN Act, 2007 which stated that the apex bank may grant temporary advances to the Federal Government with regard to 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 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 World Bank had, in December 2022, warned the Nigerian government that 62 percent of the nation’s revenue by 2027 would be used to pay interest on loans taken from the CBN.