The Federal Government of Nigeria acquired an additional N3.8 trillion through what appears to be fresh Ways and Means Borrowing within the last six months of 2023.
This is according to the latest data bulletin for the fourth quarter of 2023 released by the central bank,
The provisional data from the Central Bank of Nigeria indicates that the total amount increased from N4.4 trillion at the end of June 2023, resulting in cumulative Ways and Means balances owed by the government reaching N8.2 trillion by December 2023.
This growth in Ways and Means borrowing comes despite statements from the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, suggesting that President Bola Tinubu’s administration had not borrowed funds from the CBN. The Ways and Means provision serves as a mechanism for the government to obtain short-term or emergency financing from the CBN to address cash flow gaps.
When the Tinubu administration assumed office in May 2023, the total Ways and Means balances stood at N26.95 trillion. However, these balances were later securitized and included as part of the federal government’s domestic debt profile.
An examination of the data reveals that the balance at the end of June 2023 was N4.36 trillion, indicating that balances from the previous month may have been transferred to the Debt Management Office. From July 2023 onwards, the balances increased every month, reaching N8.21 trillion by December, representing an 88% increase over six months.
It was earlier reported that the federal government obtained approximately N2.94 trillion from the CBN through Ways and Means Advances, earmarked for servicing domestic debts. Additionally, around N4.83 trillion from Nigerian Treasury Bills and Bonds issued in 2024 were allocated to settle the Ways and Means Advances.
In the previous year, the National Assembly approved the securitization of N22.7 trillion of the N23.3 trillion previously advanced by the CBN through Ways and Means. This debt was transferred to the Debt Management Office with a 40-year tenor, a 3-year moratorium, and an interest rate of 9%.
While Section 38 of the CBN Act, 2007, allows the apex bank to grant temporary advances to the Federal Government to address temporary budget revenue shortfalls, the Act imposes a limit of five percent on such borrowing. However, amendments introduced by the National Assembly raised this ceiling to 15%, potentially leading to increased borrowing and debt service obligations for the country.
The Senate of the 10th assembly approved the securitization of the outstanding N7.3 trillion in Ways and Means, which is expected to significantly reduce the recorded figure in December.
