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Nigeria’s Debt Hits ₦87.38tn, Ways and Means Major Contributor

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debt servicing
  • Tinubu to stay within constitutional limits of borrowing.

CEM REPORT, FINANCE | Debt is not a new concept to many Sub-Saharan African countries as it has become a means to stir the economy on the path of development. While the ideology behind debt is a welcome one the cost of securing loans that translate to debt is choking many Sub-Saharan African economies

Nigeria’s total public debt profile has hit ₦87.38tn at the end of the second quarter of 2023 (June 30), a 75.29 per cent or ₦37.53tn increase in comparison to ₦49.85tn recorded at the end of March 2023. According to the Debt Management Office, the increase was fuelled by the ₦22.712tn securitized federal government Ways and Means Advances.

“Nigeria’s total public debt stock as of June 30, 2023, was ₦87.38tn ($113.42bn). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory.


“The major addition to the Public Debt Stock was the inclusion of the N22.712tn securitized FGN’s Ways and Means Advances.”

The debt management agency noted that other additions to the debt stock were new borrowings by the Federal Government and the sub-nationals from local and external sources.

“The reforms already introduced by the present administration and those that may emerge from the recommendations of the Fiscal Reform and Tax Policies Committee, are expected to impact debt strategy and improve debt sustainability.”

Analysis of the debt report by the DMO reveals that Nigeria has a total domestic debt of ₦54.13tn and a total external debt of ₦33.25tn. While the domestic debt makes up 61.95 per cent of total debt, the external makes up 38.05 per cent.

Ways and Means was a valued means of securing funds by the past Buhari led administration. The administration borrowed to the tune of ₦22.7 trillion representing 41.9 per cent of the nation’s total public debt profile.

The Buhari and Central Bank of Nigeria administration went against the law in its ways and means of borrowing, the law stipulates that the government is not supposed to borrow more than 5 per cent of its previous year’s revenues from the CBN. The CBN breached this rule by lending up to 91.27% of the federal government’s 2021 revenues in 2022,

Section 38 of the CBN Act, 2007, stipulates that the total amount of Ways and Means Advances outstanding shall not at any time exceed 5 per cent of the previous year’s actual revenue of the federal government.

“All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the federal government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid,” the act reads in part.

Just before the ninth assembly led by Senate President Ahmad Lawan left the CBN act was amended to raise the threshold of the Ways and Means facility from 5 per cent to 14 per cent.

[READ ALSO] IMF Predicts Nigeria’s Debt-to-GDP Ratio to Increase by 4.3%

However, Finance Minister, Wale Edun has said that President Bola Ahmed Tinubu led administration will not toll the line of its predecessor. He said the present administration will respect the law and stay within its limits. He further pledged to ensure a harmonious relationship between monetary and fiscal policy, saying there was a natural coordination and relationship.

“Regarding Ways and Means, President Bola Ahmed Tinubu had even while campaigning as a candidate, President-elect and President have committed not to go beyond the statutory limits.“

“However, having made that commitment and given that direction of travel, I think the idea and commitment is to come within whatever is the statutory limit as soon as possible,” Edun said.

“Mr. President is a man who keeps his word. And one of his priorities is the rule of law and as such, he will keep to the letter and the spirit and the autonomy of the central bank. So, it’s within that constraint that the coordination will take place,” he added.

He made the assertion while speaking with journalists at the ongoing 2023 Annual Meetings of the World Bank and the International Monetary Fund (IMF) in Marrakech, Morocco.

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