₦airaland Forum

insidelife22:
Nwanimo1
Abeg any memes?

Gbogbowa:
I traveled by evergreen on 22 of December 23 I paid 23,000 but I we are all refunded with 5k only is that 50percent,I also traveled with AKTC but was not refunded.this people are telling lies

Righthussle:
FG Borrowed or printed, which one dem do?

The Federal Government of Nigeria tapped into the Central Bank of Nigeria (CBN) for a substantial N2.94 trillion through Ways and Means Advances between July and December 2023.

Despite an earlier restructuring in June 2023 that trimmed down the Federal Government’s debt to the CBN via Ways and Means Advances to N4.36 trillion, a recent request from President Bola Tinubu to the Senate suggests an urgent need for approval to securitize the outstanding balance, potentially ballooning to N7.3 trillion.

This implies that over six months, the Federal Government may have effectively procured N2.94 trillion from the CBN, raising eyebrows amid the controversies surrounding this financing avenue.

Preceding the initial restructuring in June, the loan swelled by a staggering N3.42 trillion in five months, surging from N23.53 trillion in December 2022 to N26.95 trillion in May 2023.

This paints a picture of the Federal Government potentially securing approximately N6.36 trillion from the CBN through Ways and Means Advances throughout the entirety of 2023.

FG uses loan from CBN to service domestic debt
During the Saturday plenary, Senate President Godswill Akpabio read a letter from President Bola Tinubu addressing the Senate.

In the letter, Tinubu highlighted the federal government’s efforts to diversify approaches and reduce dependence on ways and means advances for domestic debt servicing.

Emphasizing the significance of the matter, Tinubu stressed the need to prioritize the securitization of the existing ways and means advances to the federal government before the end of 2023.

Tinubu said:

“While the Federal Government is considering various measures to forestall the use of Ways and Means advances for domestic debt servicing, it has become highly imperative to securitize the outstanding Ways and Means Advance of the Federal Government of Nigeria before the end of the year 2023.”

Nairametrics’ analysis revealed that the Federal Government spent about N3.23 trillion on domestic debt servicing in nine months, with approximately N1.79 trillion expended between July and September 2023, according to data from the Debt Management Office (DMO).

More Insight
The Ways and Means provision serves as a mechanism enabling the government to secure short-term or emergency financing from the CBN to address cash flow gaps.

A significant development occurred between May 3 and 4, 2023, as both chambers of the National Assembly approved the securitization of N22.7 trillion from the N23.3 trillion previously advanced by the CBN to the Federal Government through ways and means.

This debt was subsequently transferred to the Debt Management Office (DMO) with a 40-year tenor, a 3-year moratorium, and an interest rate of 9%.

In a noteworthy decision with profound implications for Nigeria’s fiscal landscape, the National Assembly also endorsed a substantial increase in the “Ways and Means” ceiling.

According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government about temporary deficiency of budget revenue at such rate of interest as the bank may determine.

The Act read 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.”

It 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 introduced amendments to the CBN Act, elevating the ceiling of Ways and Means Advances from the apex bank from five to 15% of the Federal Government’s previous year’s revenue.

This endeavour to raise the limit to 15% opens the door to more borrowing and an increased burden of debt service obligations for the country’s future generations.

However, it is noteworthy that the Federal Government surpassed this set limit in 2023, exceeding the permissible amount it can borrow from the CBN despite the earlier statement of the current Minister of Finance and Coordinating Minister of the Economy, Wale Edun, that Tinubu would adhere to the statutory limit.

Despite this breach, the Senate of the 10th assembly, mirroring its predecessor in the ninth assembly, approved the securitization of the outstanding N7.3 trillion in Ways and Means, aligning with President Tinubu’s request.

Given the escalating trend of borrowing and subsequent debt service obligations, these legislative actions spark concerns regarding the potential adverse impact on future generations.