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CBN deducts N2.03tn from Nigerian govt’s account as interest on loan payments
The Central Bank of Nigeria (CBN) has debited N2.03 trillion from the Federal Government’s account to settle interest on the loan obtained under the Ways and Means Advances.
According to statistics from the Medium-Term Expenditure Framework and Fiscal Strategy Paper 2022-2024, the debit was made from January 2020 to November 2021.
Ways and Means Advances are lending facilities provided by the central bank to fund the government during times of temporary budget difficulties.
Breakdown showed N912.57 billion was debited in 2020 and another N1.12 trillion from January to November.
The World Bank had in November last year warned the Nigeria government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this would put fiscal pressures on the country’s expenditures.
Read also: Naira falls to N580 per dollar, as CBN moves to stop sale of forex to banks
The CBN said on its website that the Federal Government’s borrowing from it through the Ways and Means Advances could have adverse effects on the bank’s monetary policy to the detriment of domestic prices and exchange rates.
“The direct consequence of central banks’ financing of deficits are distortions or surges in monetary base leading to adverse effect on domestic prices and exchange rates i.e macroeconomic instability because of excess liquidity that has been injected into the economy,” it said.
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