Despite the restructuring plan, the World Bank has predicted that interest payments on the Federal Government’s borrowing from the Central Bank of Nigeria will consume nearly 62% of government revenue by 2027.
The Nigeria Development Update, which was just published by the Washington-based bank, made note of this in its December 2022 edition.
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The World Bank report read in part;
Despite the restructuring of the Ways and Means stock in 2023, interest payments are projected to steadily increase by 2.4 percentage points of GDP between 2018 and 2027, and by 2027 interest payments will account for over 62 per cent of revenues.
The Federal Government had borrowed N6.31tn from the CBN through Ways and Means Advances in 10 months.
This increased the amount borrowed by the Federal Government from the CBN from N17.46 trillion in December 2021 to N23.77 trillion in October 2022.
According to the Debt Management Office, the Federal Government owes the apex bank N23.77 trillion, which is separate from the country’s overall public debt stock, which was N44.06 trillion in the third quarter of 2022.
Only the debts owed by the Federal Government of Nigeria, the 36 state governments, and the Federal Capital Territory are included in the public debt stock.
Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget.
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 Federal Government had paid an interest of N2.03tn from January 2020 to November 2021 on the loans it got from the CBN through the Ways and Means Advances.
It was also reported that the Federal Government paid an interest of N405.93bn from January 2022 to April 2022 on the loans it got from the CBN.