The FG’s total borrowing from the Central Bank of Nigeria rose from N17.46tn in December 2021 to N19.01tn in April 2022.
According to data from the CBN, this represents an increase of N1.55tn within the first four months of 2022. The public debt stock only includes the debts of the Federal Government of Nigeria. According to Section 38 of the CBN Act, 2007, 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 World Bank had in November last year warned the government against financing deficits by borrowing from the CBN. The Washington-based bank added that the FGs borrowing from the CBN was increasing the cost of debt in the country. Despite warnings from experts and organisations, the Federal Government has kept borrowing from the CBN to fund budget deficits.
The PUNCH reported that the FG paid an interest of N2.03tn January 2020- November 2021 on the loans from the CBN. According to Chukwu, the securitisation of the ways and means advances will further increase the interest obligations of the FG. “It might be difficult for the Federal Government to securitise those borrowings. We need to restructure the fiscal framework of the country so that we take out this dependence by the FG on CBN funding,” he said.
An economist and public sector reforms expert, Dr Chiwuike Uba, who is also the chairman of the Board, Amaka Chiwuike-Uba Foundation, urged the government to reduce its appetite for borrowing.
A development economist, Aliyu Ilias, said the refusal of the government to remove petrol subsidy had significantly increased expenditure. Forcing the government to resort to borrowing to close its widening fiscal deficit. He advised the government to seek better ways to generate revenue. Such as widening its tax net and privatising its assets.
-Punch
