N23 Trillion Loan: FG Reveals It Costs More to Borrow From CBN Than China, IMF, World Bank, Others
- The Nigerian government has lamented that the loan taken from the CBN is the most expensive
- Olumide Ayodele of the Budget Office of the Federation revealed that it is cheaper to service external loans than the CBN Ways and Means
- He added that the Nigerian government is servicing the N23 trillion CBN loan with N2 trillion
The Nigerian government has disclosed that the money borrowed from the Central Bank of Nigeria (CBN) is the most expensive debt it is servicing.
Presently, the government revealed it is servicing the N23 trillion loan borrowed from the CBN under the Ways and Means Advances, with over N2 trillion.
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CBN uses prevailing interest rate to determine debt servicing
Olumide Ayodele, the technical adviser to the Director General of the Budget Office of the Federation, revealed this on Monday, September 4, 2023, in Abuja at the training of MDAs on 2024 Budget Preparation.
Ayodele said the federal government paid the apex bank N2 trillion in debt servicing, stating that borrowing from CBN is more expensive than other sources.
He explained that the calculation used to determine what the Nigerian government pays as debt servicing to CBN is the interest rate set by the Monetary Policy Rate (MPR) plus 2.
It means that the Nigerian government pays interest on what it borrowed from the apex bank at the current interest rate determined by the MPC meeting plus 2, which is 18.75% plus 2, amounting to 20.75% as interest rate to service the N23 trillion it borrowed from CBN.
FG tasks MDAs to stick to budget provisions
The Nation reports that Ayodele stated that the government's debt servicing also soars each time the CBN hikes interest rates.
He asked all Ministries, Departments, and Agencies (MDAs) to work within the budgetary provisions for the 2023 fiscal year.
The attendees revealed that given the present inflation, it is difficult to stick to budgetary provisions, reminding Ayodele that the price of fueling government cars and diesel for generators has skyrocketed.
Nigeria successfully services debt with $1.7 billion
The revelation came just as the Nigerian government said it spent $1.7 billion on external debt servicing.
The disclosure was revealed in the Export and International Payment data released by the Central Bank of Nigeria (CBN).
Legit.ng reported that the Nigerian government spent over 85% of its revenue servicing debt in February 2023.
Meanwhile, President Bola Tinubu vowed to break Nigeria's over-reliance on borrowing for public spending. He promised to end the resulting burden of debt servicing it places on managing Nigeria's limited government revenues.
Nigeria successfully repays China, World Bank, others $1.17bn loan, still owing
Legit.ng reported that the federal government paid $1.17 billion to service foreign debt commitments in the first half of 2023.
This was revealed in the Export and International Payment data released by the Central Bank of Nigeria (CBN).
Legit.ng earlier reported that the Nigerian government spent over 85% of its revenue servicing debt in February 2023.
Source: Legit.ng
