Despite concerns from economists and experts regarding outstanding loans, the Central Bank of Nigeria (CBN) increased its loans to the government by N3.77 trillion during the first two months of 2023.
According to the CBN’s latest data on “Money and Credit Statistics data, credit from CBN to the government stood at N28.43 trillion at the end of February 2023.
In January, the credit to the government (net) was N26.63 trillion, an increase from N24.65 trillion in December 2022. This indicates that the government received N1.9 trillion in credit from CBN in January and N1.8 trillion in February.
In May 2015 when the Buhari administration came to office, the CBN’s loans to the federal government stood at N789.7 billion cumulatively. Since then, the government has drawn central bank loans each year at an unprecedented level.
Between January and October 2022 alone, the government drew N5.6 trillion. By comparison, between December 2012 and May 2015, a period of two and half years, ways and means advances rose by N654.9 billion.
The CBN Act says the CBN may grant temporary advances to the federal government in respect of temporary deficit of budget revenue at such rate as the bank may determine. It however warns that the total amount of such advances outstanding “shall not at any time exceed five (5) percent of the previous year’s actual revenue of the Federal Government.”
In addition, it stipulates that, “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”
The bank’s loan as of December 2015 stood at N856 billion; it rose to N2.2 trillion in December 2016, and reached N3.3 trillion in December 2017.
By December 2018, the figure rose to N5.4 trillion and reached N8.7 trillion in December 2019. The amount was N13.1 trillion by December 2020 and N17.4 trillion by December 2021, and it reached N23.8 trillion by 2022.