The President Muhammadu Buhari-led federal Government overshot its borrowing target by N1.15 trillion in the period covering January and August 2022.
This was contained in a copy of the public presentation of the 2023 proposed budget by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, as published by PUNCH on Tuesday.
According to the report, the Federal Government planned to borrow N6.10 trillion in 2022 with N3.53 trillion coming from domestic creditors, while N2.57 trillion from foreign creditors.
According to the document, the Federal Government estimated that it would borrow N4.07tn between January and August 2022.
However, the Federal Government accumulated N5.33 trillion debt within the period under review, which is N1.15 trillion higher than the expected N4.07 trillion planned debt.
A further breakdown showed that the Federal Government borrowed N4.82 trillion from domestic creditors and N510.21 billion from foreign creditors.
At the domestic front, the Federal Government borrowed from creditors of the Central Bank of Nigeria through the Ways and Means Advances.
Ways and Means’s Advances are loan facilities through which the CBN finances the shortfalls in the government’s budget.
It could be recalled that the Federal Government borrowed a total of N4.61 trillion from the Central Bank of Nigeria through Ways and Means Advances between January and August 2022.
This means that the majority of the Federal Government’s domestic debt came from its debt to the CBN.
CBN had, earlier, warned on its website that the Federal Government’s borrowing from it through the Ways and Means could affect the bank’s monetary policy adversely to the detriment of domestic prices and exchange rates.
“The direct consequence of central banks’ financing of deficits are distortions or surges in monetary base leading to adverse effects on domestic prices and exchange rates i.e. macroeconomic instability because of excess liquidity that has been injected into the economy,” the apex bank had said.
The World Bank had, in November last year, warned the Nigerian government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this put fiscal pressures on the country’s expenditures.
Despite warnings from experts and organisations, the Federal Government has kept borrowing from the CBN to fund budget deficits.
The N22.07 trillion owed the apex bank by the Federal Government, meanwhile, is not part of the country’s total public debt stock, which stood at N42.84 trillion as of June 2022, according to the Debt Management Office (DMO).
Recently, the country’s debt rose by N30.72tn between July 2015 and June 2022, according to data released by the DMO.
According to the DMO statistics, Nigeria’s total debt as of June 30, 2015, stood at N12.12 trillion.
By the first half of 2022, the figure had risen to N42.84 trillion, an increase of 253.47 per cent.
Despite the high increase in debt over the years, the government still plans to borrow N8.4 trillion in 2023. Read more.
