By Sodiq Adelakun
The Federal Government’s debt to the Central Bank of Nigeria (CBN) has decreased to N4.36trillion after a significant portion of it was restructured in June 2023, according to provisional data from the CBN’s quarterly statistical bulletin for the second quarter of 2023.
The data reveals that the debt had increased by N3.42trillion in just five months, rising from N23.53trillion in December 2022 to N26.95trillion in May 2023.
This reduction in debt is a positive development for the Federal Government, as it indicates progress in managing its financial obligations.
The restructuring of the debt likely played a significant role in this reduction.The Ways and Means Advances, which refer to the loans provided by the CBN to the government to bridge temporary budget deficits, have been a major source of concern due to their impact on inflation and the overall economy.
It was recently reported that the Federal Government paid an interest of N912.32billion in the first quarter of 2023 on the loans it got from the CBN.
This amount was stated in the Q1, 2023 Budget Implementation Report by the Budget Office of the Federation.
The amount spent paying interest on this loan was 161.47 percent higher than N348.92billion spent in the same quarter of 2022.
Recall that the Federal Government planned to spend N1.2trillion on servicing the loans it got from the CBN through Ways and Means Advances.
This means that the government planned to spend about N300billion quarterly.
However, it had spent about 76.03 percent of its budget for the interests on the ways and means advances.
Ways and Means Advances is a loan facility used by the CBN to finance the government in periods of temporary budget shortfalls subject to limits imposed by law.