The Central Bank of Nigeria (CBN) extended a staggering N23.18 trillion loan to the Federal Government in the year ended December 31, 2022, under its ‘Ways and Means’ policy as revealed in the apex bank’s recent financial report.
This loan, however, surpassed the statutory limit by an alarming N22.9 trillion.
The CBN’s Group and Bank profits for the year stood at N103.854 billion and N65.626 billion, respectively, indicating a notable increase compared to the previous year (2021: N75.125 billion and N31.044 billion, respectively).
The financial statements, prepared based on IFRS Standards and guidelines issued by the Financial Reporting Council of Nigeria (FRCN), raise concerns over compliance with Section 38 of the CBN Act. This section imposes a limit on the advance the Bank can grant to the Federal Government in any year, pegged at 5 percent of the actual FGN revenue in the preceding year.
For the year ended December 31, 2021, the FGN recorded a total revenue of N5.045 trillion, equating to a statutory limit of N252.272 billion. The current loan far exceeds this limit, prompting questions about adherence to fiscal responsibility regulations.
The timing of this revelation coincides with the appointment of Jim Obazee, former CEO of FRC, as a special investigator by President Bola Tinubu to examine the Central Bank of Nigeria and related entities. The FRC, having received the report, is expected to convene a committee to review the compliance of this high-profile entity.
Instances of non-compliance with accounting standards and corporate disclosures will be addressed through an inspection meeting where the CBN will have the opportunity to clarify and correct any issues. The FRC, as part of its oversight responsibilities, will ensure that transparency and accuracy are maintained in the financial affairs of public interest entities such as the CBN.
As the review unfolds, the financial community awaits the FRC’s findings and the potential impact on the CBN’s operations, emphasizing the importance of regulatory compliance in maintaining public trust and financial stability.
