CBN faces allegations of misappropriating N2.7tn interest from Ways and Means
The Federal Government has accused the Central Bank of Nigeria of misappropriating N2.73 trillion in interest payments from Ways and Means advances, raising alarms over the management of public funds.
The allegation was made in the Federal Government’s consolidated financial statement for the year ending December 31, 2021, which was submitted to the National Assembly by Auditor-General, Shaakaar Chira. The report, with reference number AuGF/AR.2021/01, is dated July 31, 2024.
According to the report, the Federal Government alleged that the Central Bank of Nigeria retained interest charges totaling N2.73 trillion, using the funds “for its sole benefit” instead of depositing them back into the Consolidated Revenue Fund.
As of December 31, 2021, the negative cash balance of the Consolidated Revenue Fund (CRF) stood at N17.1 trillion, which included N4.4 trillion in Ways and Means advances.
The Ways and Means facility, a temporary loan mechanism provided by the CBN to the government to finance budget deficits, is at the centre of the controversy.
The Constitution of the Federal Republic of Nigeria, 1999 (as amended), and the Financial Regulations of 2009 strictly prohibit unauthorised withdrawals from the CRF or overdrawn government accounts.
Section 80(2) of the Constitution states that no funds shall be withdrawn from the CRF without approval by an appropriation act or supplementary act, while paragraph 710 of the Financial Regulations bars overdrafts and mandates that any interest incurred must be refunded.
The report revealed that the Consolidated Revenue Fund (CRF) and four other ministries, departments, and agencies had overdrawn accounts totaling N17.1 trillion, a figure not backed by proper approvals or documentation.
The breakdown of the CRF’s negative balance included N9.41 trillion for reconciled domestic debt service, N4.45 trillion for Ways and Means withdrawals, and N483.97 billion for Paris Club loan refunds.
Other components included deferred state loan deductions and CPV coupon payments.
The report read, “The CRF negative balance of (N17,105,111,709,523.00) as at 31st December 2021 included actual Ways and Means advance of N4.4 trillion taken by Government and interest charged on it for the sole use of CBN as though the Ways and Means a loan from CBN funds or from any syndicated group of lenders.”
In its response, the Federal Government stated that the Central Bank of Nigeria had mismanaged the Ways and Means facility, treating the funds as if they were loans from its balance sheet or syndicated facilities from local or foreign lenders.
The government argued that the N2.73 trillion in interest charged on these advances was wrongly retained by the CBN and called for its immediate refund to the Consolidated Revenue Fund.
The report noted, “The interest charged on Ways and Means by CBN was misappropriated by CBN for its sole use whereas the Actual Ways and Means was not a facility from its funds or balance sheet, nor was it a syndicated facility from a group of local and foreign lenders.
“CBN must therefore refund to the Federal Government of Nigeria the interest of N2.73 trillion it cornered for its sole use as of 31st December 2021.”
