Nigerian Government Seeks Help From Citizens to Pay CBN’s N20trn Loan, Full Repayment in 40 Years
- Over the last seven years, the Central Bank of Nigeria has lent the Federal Government over N22 trillion
- Because the loans have become a burden, the federal government has decided to raise the repayment from citizens in the form of a bond
- Nigerians who agree to invest in the bond will be repaid with interest over a period of 40 years
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The federal government has announced plans to repay its N20 trillion debt owed to the Central Bank of Nigeria (CBN) by issuing securities such as treasury bills and bonds for Nigerians to buy.
Zainab Ahmed, minister of finance, budget and national planning, made this known in Abuja while giving a breakdown of the 2023 appropriation bill on Wednesday, the Cable reports.
The federal government has been borrowing from the CBN through “Ways and Means”
Source: Getty Images
Ways and Means is a loan facility through which the CBN finances the government’s budget shortfalls.
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In layman's terms, it is considered CBN printing money to give back to the federal government in shortage of funds.
Buhari gives approval
Ahmed, while speaking, confirmed that President Muhammadu Buhari had approved the securitisation of the N20 trillion debt.
She said:
“The total Ways and Means are N20 trillion, and President Muhammadu Buhari has approved securities. The securitisation will be over 40 years with an interest rate of nine percent.
“Over the years, we have been paying the interest component at the current rate that is charged on the Ways and Means.”
“The total Ways and Means today is 20 trillion and we have the approval to securitize. The securitization will be over in a 40-year period with an interest rate of 9%. But over the years, we have been paying the interest component at the current rate that is charged on the Ways and Means.
Nigerians to help
The move by CBN means that Nigerians will need to buy the federal government treasury bills and bonds.
A Treasury bill is a short-term government debt obligation backed by the Treasury Department with a maturity of one year or less.
While a bond is a fixed-income investment representing a loan made by an investor to a borrower, usually corporate or governmental.
Trends on FG using ways and means of CBN
Legit.ng had reported that the CBN has increased its loans to the government from N789.6 billion to more than N20 trillion since the administration took office.
In just seven months this year (2022), the CBN has printed over N4.6 trillion.
In effect, the CBN has been printing money in large quantities to fund the government's spending in the face of revenue challenges.
CBN can't find enough dollars
Meanwhile, Legit.ng reported that Foreign airlines operating in Nigeria are struggling to repatriate their dollar dividends and are stuck with naira they don’t need.
The idle cash lying in the Nigerian accounts of over 30 airlines is now a source of worry.
The trapped money rose from $147 million (N61 billion) as of August 2021 and has nearly doubled, reaching $283m (about N117.6bn).
Source: Legit.ng
