Nigeria’s Debt Servicing Exceeds Oil Revenue as FG Reveals CBN’s Ways and Means More Expensive
- The Budget Office of the Federation has revealed that the CBN’s Ways and Means debt servicing surpassed Nigeria’s six months’ oil earnings.
- The report said that the Nigerian government serviced CBN’s Ways and Means with N1.6 trillion in the first half of 2023
- Total crude oil earnings for the country in the period amounted to N813.58 billion.
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A recent report from the Budget Office of the Federation (BOF), the Nigerian government’s interest payment on Central Bank of Nigeria’s Ways and Means Advances in the first half of this year exceeded the country’s crude oil earnings.
The report titled ‘Medium Term Expenditure Framework and Fiscal Strategy Paper,’ released on Thursday, October 19, 2023, showed that the apex bank’s Ways and Payment of N1.68 trillion surpassed the government’s oil earnings of N813.58 billion, revealing an excess of 107% over oil revenue.
Source: Facebook
CBN's Ways and Means is responsible for FG's bloated debt servicing
The BOF explained that the FG’s debt service situation worsened due to the surge in Ways and Means payments, which increased by N966 billion from the first half of the year’s budgeted amount of N700 billion to N1.68 trillion, an amount that also exceeded the 2023 budgeted amount of N1.2 trillion by over N400 billion.
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The report said that the government’s debt service account was responsible for driving the country’s total debt service for the period by N109 billion, to hit N3.94 trillion in the process.
The development exceeded the 2023 debt service budgeted amount of N3.8 trillion.
Nigeria's debt servicing declines in 6 six
BusinessDay reports that further analysis shows that other debt service components outside the Ways and Means payment significantly declined.
Nigeria’s foreign loan debt service declined by 49% or N528 billion, reaching N530 billion from the budgeted first-half amount of N1.06 trillion. In comparison, domestic debt service charges fell by 11.1% or N214 billion to settle at N1.7 trillion from the budgeted N1.9 trillion for the first half of 2023.
The Budget Office said that debt service costs surpassed the budget by N1.68 trillion due to interest on CBN’s Ways and Means of N1.89 trillion and higher interest rates on borrowings.
Buhari's government allegedly abused CBN's Ways and Means
CBN’s Ways and Means became a highly controversial financial instrument for ex-President Muhammadu Buhari’s government.
Reports say Buhari exceeded the 5% limit and increased Ways and Means from N856 billion to N23.8 trillion, a growth of 2,635% in seven years.
The report quoted by BusinessDay said that in 2017, actual revenue amounted to N2.7 trillion, while Ways and Means hit N1.1 trillion, an equivalent of 37.2% of the prior year’s revenue of N2.95 trillion.
In 2018, revenue was N3.87 trillion, while Ways and Means were estimated at N2.1 trillion.
Experts react to Nigeria's colossal debt servicing
In his tweet on X, formerly Twitter, finance analyst Kalu Aja said that Buhari’s government and Emefiele left Nigeria with more CBN debt than previous governments.
“Warning: read this tweet sitting down. Nigeria, January to July 2023 Oil revenue: N813b Interest on W&M: N1.69t* *CBN lending to FGN So, Buhari and Emefiele left Nigerians with an interest charge that is MORE than oil revenues,” he said.
N23 trillion loan: FG reveals it costs more to borrow from CBN than China, IMF, World Bank, others
Legit.ng reported that 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.
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.
Source: Legit.ng
