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Interest on CBN’s N22.7tr loan to take 62% of Nigeria’s revenue – World Bank
The World Bank has revealed that about 62 percent of the Federal Government’s revenue would be gulped by debt owed to the Central Bank of Nigeria (CBN) in 2027.
In its latest edition of Nigeria Development Update (NDU) titled: “Nigeria’s choice,” the World Bank said interest to be paid on the debt owed to the CBN would gulp the majority of the government’s revenue even if it goes ahead to restructure the “Ways and Means” this year.
The ways and means are CBN loans issued to the federal government as emergency funding to finance budget deficits.
The Senate had late last year stood down President Muhammadu Buhari’s request to restructure the N22.7 trillion loan advances the government took from the apex bank.
The CBN’s loan to the federal government had increased by N6.3 trillion within 10 months from N17.5 trillion in December 2021 to N23.7 trillion in October 2022.
The report read: “Despite the restructuring of ways and means stock in 2023, interest payments are projected to steadily increase by 2.4 percentage points of GDP between 2018 and 2027, and by 2027 interest payments will account for over 62 percent of revenues.
“Consequently, the burden of expenditure consolidation efforts is expected to be borne heavily by capital expenditures, which are projected to stay limited at 3.3 percent of GDP, well below what is needed to close Nigeria’s large infrastructure gap.
“Over the medium term, the fiscal deficit is expected to remain in breach of the legal limit set in the fiscal responsibility act (2007), and the debt stock is expected to increase.
“Debt is expected to remain under the sustainability threshold of 70 percent on the key solvency risk measure of the debt-to-GDP ratio, reaching about 45 percent of GDP in 2027.”
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