FG borrows N2.45tn from CBN amid fiscal risks as Peter Obi cautions FG.

The Federal Government’s total borrowing from the Central Bank of Nigeria through Ways and Means Advances rose from N17.46tn in December 2021 to N19.91tn in June 2022.

According to data from the CBN, this shows that the Federal Government borrowed N2.45tn from the apex bank within six months.

The N19.91tn owed the apex bank by the Federal Government is not part of the country’s total public debt stock, which stood at N41.60tn as of March 2022, according to the Debt Management Office.

The public debt stock only includes the debts of the Federal Government of Nigeria, the 36 state governments, and the Federal Capital Territory.

Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget.

According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government with regard to temporary deficiency of budget revenue at such rate of interest as the bank may determine.

The Act read in part, “The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government.

Similarly the presidential candidate of the Labour Party, Mr. Peter Obi, has cautioned the President Muhammadu Buhari-led Federal Government against further borrowing for consumption.

Obi handed down the words of caution in a series of tweets on his verified twitter handle @PeterObi, yesterday.

He said: “As a matter of urgency, Nigeria must stop borrowing for consumption, but only borrow to invest in regenerative development projects and other productive ventures.

“It’s ironical that states that received fiscal bailouts did not repay the loans and are still borrowing beyond their revenue earnings.

“Also, it has become imperative to restrict federal borrowings to the statutory 5 per cent of the previous year’s revenue.”

It would be recalled that the Minister of Finance, Zainab , had recently announced that Nigeria’s debt service, which has hit N1.94 trillion, has overshot the nation’s earnings by N310 billion.