The Federal Government of Nigeria got an additional N3.8 trillion in what looks to be new Ways and Means Borrowing in the final six months of 2023.
This is in line with preliminary data that was recently made available by the central bank in its most recent Statistics Bulletin for the fourth quarter of 2023.
According to provisional figures from the CBN, the total amount increased from N4.4 trillion at the end of June 2023 to N8.2 trillion as of December 2023, representing the government’s outstanding Ways and Means balances.
This is true even if news sources state that Wale Edun, the Coordinating Minister of the Economy and Minister of Finance, has said that President Bola Tinubu’s administration has not taken out a loan from the CBN.
In order to fill cash flow deficits, the government can get emergency or short-term financing from the CBN through the Ways and Means provision.
When the Tinubu administration took office in May 2023, there was a total of N26.95 trillion in ways and means balances. However, the amounts were securitized and included in the domestic debt profile of the federal government.
Based on a preliminary review of the data, it appears that the amount at the end of June 2023 was N4.36 trillion, suggesting that the balances from previous months might have been transferred to the Debt Management Office.
But starting in July 2023, the balances rise each month, reaching N4.5 trillion in July and N5.1 trillion in August—the first time the N5.1 trillion threshold is crossed.
With over N1.3 trillion borrowed in a single month, the total by September was N6.4 trillion, the greatest amount ever. Following that, it increased to N7.2 trillion in October and then slightly increased to N7.6 trillion in November.
The total reached N8.21 trillion in December at the end of the year, indicating an 88% growth in Ways and Means in just six months.
Before this, the News Chronicles reported that the CBN provided the federal government with Ways and Means loan totaling around N2.94 trillion. The government had to turn to borrowing from the CBN in order to meet its obligations to holders of domestic debt because this was designated for the servicing of its domestic debts.
Additionally, it was revealed that the federal government set aside almost N4.83 trillion to settle the CBN’s Ways and Means Advances from the revenues of Nigerian Treasury Bills (NTBs) and Bonds issued in 2024.
The securitization of N22.7 trillion, which was earlier given to the Federal Government by the CBN through ways and means, was approved by the National Assembly last year.
After that, this loan was moved to the loan Management Office (DMO) with a 9% interest rate, a 3-year moratorium, and a 40-year tenor.
Ways and Means Act: What It Means
Per Section 38 of the CBN Act of 2007, the Federal Government may receive short-term advances from the Apex Bank in response to a brief shortfall in budgetary revenue, at an interest rate that the bank may choose.
The Act set a five percent ceiling on borrowing by the Federal Government, a cap that was flagrantly broken by the previous administration.
The CBN Act was amended by the National Assembly, raising the maximum amount of Ways and Means Advances from the top bank from five to fifteen percent of the Federal Government’s revenue from the previous year.
The country will be forced to shoulder higher debt service responsibilities as a result of this attempt to raise the ceiling to 15%.
Additionally, the Senate of the Tenth Assembly authorized the securitization of the outstanding N7.3 trillion in Ways and Means, following in the footsteps of its predecessor in the Ninth Assembly. This is probably going to cause a major crash in the December figure.
