- The Federal government has repaid part of its debt owed to the Central Bank of Nigeria
- The debt, which is believed to be over 20 trillion, was collected to help the Nigerian government finance its budget deficit
- Sadly, however, as FG makes attempt to reduce its debt burden, the depreciation of the Naira is increasing the debt burden
The federal government has revealed that it paid N405.93 billion to the Central Bank of Nigeria (CBN).
The money was paid as interest on the loans it got from the CBN through the Ways and Means Advances.
Ways and Means Advances is a loan facility the central bank uses to finance the government in periods of temporary budget shortfalls subject to limits imposed by law.
Finance Minister Zainab Ahmed disclosed this in its Medium-Term Expenditure Framework and Fiscal Strategy Paper 2023-2025.
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Previously, the Federal Government spent N912.57bn in 2020 and N1.12tn from January to November last year on interest on Ways and Means Advances.
Nigeria's debt increased by N518bn without borrowing
The decline in the value of the Naira to the US dollar has added an extra N518bn to the external debt burden of Nigeria.
According to the Debt Management Office (DMO), at the end of March 2022, the total federal government’s external debt stood at $39.69 billion.
At an exchange rate of N416.63/$ in March 2022, the Naira equivalent of federal government external debt was at N15.3 trillion.
Today, Wednesday 3 2022, with the official exchange rate at N430.67, the debt has increased to N15.89 trillion, meaning N518 billion has been added to the debt burden without borrowing.
On the growing debt burden, Kingsley Moghalu, former deputy governor of CBN and also a one-time presidential aspirant, said:
“When some of us were warning that we are heading into a debt crisis, some official jokers in high places in this country told us, “No! Our debt to GDP ratio is still manageable.
"Now that we have earned N1.6 trillion in Q1 of 2022 and spent N1.9 trillion to service debt, effectively borrowing over N300 billion to pay debt, the jury is in. We have fallen off the debt cliff."
Kingsley added that whoever leads Nigeria now must be able to pull a rabbit out of a hat as the chances of getting debt relief, as it happened during the regime of the former president Olusegun Obasanjo, are very slim these days, Businessday reports.
Nigerian Government Spends N41.9 billion on debt servicing in January alone
Legit.ng reported that Nigeria’s monthly debt servicing increased by $31.46 million in one month to $101.29 million in January, according to figures released by the Central Bank of Nigeria (CBN)
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The Punch report shows a 45 per cent jump month-on-month.
The CBN said in its data on debt service repayment that the federal government spent about $69.83 on debt service repayment in December.