The CBN (Central Bank Of Nigeria) through its periodic publications revealed a total sum of N749 billion was lent out to the Federal Government. This is in addition to its former debt, which is about N22.8 trillion. The loan termed “ways and means” was about #648 billion before the current government.
CBN/FG: Why The Loan
The Federal government, every month, has a budget deficit that affects the Prorate Level. This is a term used for the equal distribution of whatever is being allocated.
The Revenues received by the FG exceed the budget, making it a struggle. The FG now relies heavily on the ‘’ways and means’’ for effective administration.
CBN: What we should know
The year 2022 is on track to be the year with the highest ‘’ways and means’’. Asides from the #749 billion lent by the CBN to the FG, a significant sum of #1.4 trillion was lent out in August this year.
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- With the level of borrowing that outweighs the budget for each month, this year can be perceived to have a fiscal deficit just like previous years. FG already confirmed it has missed out on its revenue target when it published its 2022 budget assessment.
- CBN also complained of the excessive borrowing by the FG. According to them, it can frustrate the means of controlling the nation’s overall money supply and achievement of economic growth.
What Govt Intends to do
The Minister of Finance Budget and National Planning, Dr. Zainab Ahmed announced at the Ministerial Presentation of the 2023 Budget held in Abuja, that she has received approval from the FG to securitize the CBN’s N20 trillion-worth Ways and Means portfolio.
The Government has decided to convert CBN ways and means loans to Bonds which will last for 40 years. The Government plans to turn the loans into marketable securities to help raise money for a certain amount of time. The government also included N1.2 trillion as a debt service for ways and means in 2023.
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