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The Central Bank of Nigeria’s advances to the federal government rose 2900 per cent in the last seven years to N23.8 trillion, an unprecedented rise that violated the law, stoked inflation and worsened the country’s debt burden.
Central banks sometimes help governments to fund budget deficits, but such loans, called Ways and Means Advances, are tightly controlled as they can fuel inflation and distort monetary policy.
In May 2015 when the Buhari administration came to office, the CBN’s loans to the federal government stood at N789.7 billion cumulatively. Since then, the government has drawn central bank loans each year at an unprecedented level.
The CBN Act says the CBN may grant temporary advances to the federal government in respect of temporary deficit of budget revenue at such rate as the bank may determine. It however warns that the total amount of such advances outstanding “shall not at any time exceed five (5) percent of the previous year’s actual revenue of the Federal Government.”
The Senate on Wednesday rejected President Buhari’s request for approval of N23.7 trillion CBN loans.
Peoplesmind
