FG spends N912.32bn to service loans from CBN in Q1 2023

The Central Bank of Nigeria (CBN) Ways and Means Advances has cost the Federal Government a whopping N912.32bn to service in the form of interest in the first quarter of 2023.

This figure was stated in the Q1, 2023 Budget Implementation Report by the Budget Office of the Federation.

According to the report, the amount spent paying interest on this loan was 161.47 per cent higher than the N348.92bn spent in the same quarter of 2022.

It will be recalled that the Federal Government had planned to spend N1.2tn on servicing the loans it got from the CBN through the Ways and Means Advances, translating to about N300 billion per quarter.

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.

Section 38 of the CBN Act, 2007, allows the apex bank to 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.

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The Act reads in part: “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, however, placed a limit of five per cent on how much the Federal Government could borrow, although the previous administration severely violated the limit.

The National Assembly, in a controversial move, has however amended the CBN Act to raise the limit to 15 percent.