FG’s loans from CBN increased to N22.8tr from N648bn in 2015

Nigeria’s central bank increased its ‘Ways and Means’ loans to the federal government in September by N749 billion, the latest data reveals.

Nairametrics obtained the data from the central bank’s periodic publications.

The total ways and means loans to the federal government have now increased to N22.8 trillion as of September 2022 and rising.

Ways and means was about N648 billion when the current government came to power at the end of May 2015.

What is “Ways and Means”? 

The ways and means provision allows the government to borrow from the Apex Bank if it needs short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.

Provisions in the act cap monetary financing of fiscal deficits at 5% of the prior year’s revenues.

However, since the government started experiencing a significant shortfall in revenue, it has relied heavily on the central bank to finance its expenditure programs via Ways and Means.

2022 is on track to record the highest loan extension to any government in Nigeria’s history via ways and means.

Big picture

September’s increase of N749 billion is the most the central bank has lent to the government after the whopping N1.4 trillion dolled out in August.

Nairametrics reported the ways and means crossed N22 trillion in August after the apex bank increased lending by N1.4 trillion.

According to Nairametrics records, the central bank has now lent the government a whopping N5.3 trillion this year alone and more than the N4.3 trillion lent in the whole of 2021.

The federal government confirmed it has missed out on its revenue target when it published its 2022 budget assessment.

As of August 2022, FGN’s retained revenue was N4.23 trillion, 64% of the pro-rata target of N6.65 trillion.

Meanwhile, the FGN share of oil revenues was N395.06 billion (representing 27.1% performance), while non-oil tax revenues totalled N1,549.91 billion – a performance of 102.9%.

The actual expenditure amount was N9.56 trillion (N3.5 trillion on debt service) compared to the target of N11.55 trillion.

Debt Issues

While the government struggles with revenues its budget deficit continues to widen ballooning past its pro-rate target.

According to the government, the N5.33 trillion deficit as of August is N430.82 billion above the prorate level.

The level of borrowing is also N1.26 trillion ahead of the July target.

Meanwhile, the total deficit included in the 2023 budget is about N10.8 trillion compared to the N7.35 trillion planned for 2022.

Repayment

The government has said it will convert CBN ways and means  loans to bonds over 40 years.

The  Minister of Finance Budget and National Planning, Dr. Zainab Ahmed, confirmed this when she said she has received approval to securitize the Central Bank of Nigeria’s (CBN) N20 trillion-worth Ways and Means portfolio.

The government also included N1.2 trillion as debt service for ways and means in 2023.