The Federal Government paid an interest of N912.32bn in the first quarter of 2023 on the loans it got from the Central Bank of Nigeria through Ways and Means Advances, according to findings by Saturday PUNCH.
This amount was stated in the Q1, 2023 Budget Implementation
Report by the Budget Office of the Federation.
The amount spent paying interest on this loan is 161.47 per
cent higher than the N348.92bn spent in the same quarter of 2022.
The Federal Government planned to spend N1.2tn on servicing
the loans it got from the CBN through the Ways and Means Advances.
This meant that the government planned to spend about N300bn
quarterly.
However, it had spent about 76.03 per cent of its budget for
the interests on the ways and means advances.
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.
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 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.”
The Act placed a limit of five per cent on how much the
Federal Government could borrow, although the previous administration severely
violated the limit.
However, the House of Representatives of the 9th National
Assembly, amid protest, approved an amendment to the CBN Act, raising the
ceiling of Ways and Means Advances from the apex bank from five to 15 per cent
of the Federal Government’s previous year’s revenue.
The House gave the approval at an emergency sitting, in
concurrence with the Senate, which held an emergency plenary to consider and
approve some economic bills.
The National Assembly made the move amid criticisms that the
Federal Government had obtained WMAs beyond the five per cent threshold of the
CBN.
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