FG Plans To Pay N1.2 Trillion To Service CBN Loans

FG Plans To Pay N1.2 Trillion To Service CBN Loans

The Federal Government intends to spend N1.2 trillion servicing the loans they borrowed from the Central Bank of Nigeria (CBN) through the Ways and Means Advances.

The central bank uses a borrowing mechanism known as “Ways and Means Advances” to support the government when there are brief budget gaps, subject to any legal restrictions.

The 2023 fiscal framework document, according to The Jevibe News, indicated that the Federal Government earmarked N6.31tn to cover its overall obligations.

FG Plans To Pay N1.2 Trillion To Service CBN Loans

                                  FG Plans To Pay N1.2 Trillion To Service CBN Loans | Jevibe

A breakdown showed that the Federal Government allocated approximately N3.3tn to service domestic debts, N1.81tn for foreign debts, and N1.2tn for ways and means.

The document also showed that this was the first time the Federal Government was making a budgetary allocation for ways and means.

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However, the CBN has said on its website that the Federal Government’s borrowing from it through the Ways and Means Advances could have adverse effects on the bank’s monetary policy to the detriment of domestic prices and exchange rates.

“The direct consequence of central banks’ financing of deficits are distortions or surges in the 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,” it said.