30.2 C
Wednesday, February 1, 2023

CBN Financing of FG continues as Interest on Way & Means Hit N219bn in Q1

Must read

- Advertisement -
- Advertisement -

The Central Bank of Nigeria (CBN) has continued to finance the Federal Government (FG), by monetizing its fiscal shortfalls as the interest on Ways and Means financing hit N219 billion in the First Quarter (Q1) of 2020.

Ways and Means financing is basically the printing of money by the CBN.

The data which comes from the 2020 – 2022 Medium Term Expenditure Framework & Fiscal Strategy of the Federal Government, prepared by the Federal Ministry of Finance, Budget and National planning, also shows that the FGs retained revenues was N950.56 billion in Q1, a 52 percent shortfall compared to budgeted estimates.

The CBN’s net financing to the Federal government stood at N4.4 trillion as at August 2019 from less than N400 billion in December 2018, according to most recent available CBN data.

The N4.4 trillion net loans to the Federal Government (August 2019), is the net sum of outstanding CBN overdrafts to the FG minus the government’s treasury single accounts (TSA) deposits with the CBN.

Printing so much money and lending it to the federal government is also a violation of the Central Bank Act of 2007 (Section 38.2) which caps advances to the FGN at 5 per cent of the previous year’s revenues.

Since 2015, when President Muhammadu Buhari first assumed office, the total amount of money borrowed from the CBN (Ways and Means) to meet fiscal obligation has surged astronomically.

In 2014, borrowing by the Federal Government stood at N922 billion. This later surged to N2.5 trillion in 2015, N5.21 trillion in 2016, N5.87 trillion in 2017, and a whopping N8.12 trillion in 2018.

Analysts say that such money printing or financing of the FG by the CBN has the effect of debasing the local currency the naira, and could spark hyper-inflation.

- Advertisement -
- Advertisement -

More articles


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -

Latest article