FG plans to convert CBN ‘Ways and Means’ loans to bonds over 40 years
The federal government says it will repay the N20 trillion debt owed to the Central Bank of Nigeria (CBN) with securities such as treasury bills and bonds issuance.
Zainab Ahmed, minister of finance, budget and national planning, made this known on Wednesday in Abuja while giving a breakdown of the 2023 appropriation bill.
The federal government has been borrowing from the CBN through “Ways and Means”.
Ways and Means is a loan facility through which the CBN finances the government’s budget shortfalls.
She said President Muhammadu Buhari had approved the securitisation of the N20 trillion debt.
“The total Ways and Means are N20 trillion, and President Muhammadu Buhari has approved securities. The securitisation will be over 40 years with an interest rate of nine percent,” Ahmed said.
“Over the years, we have been paying the interest component at the current rate that is charged on the Ways and Means”
the proposed action of the government is in contravention of Section 38, sub-section 3(b) of the CBN Act, 2007.
The act states that “…no repayment shall take the form of a promissory note or other promises to pay at a future date or securitisation by way of issuance of treasury bills, bonds, certificates or other forms of security which are required to be underwritten by the bank.”
The act also specified that monetary financing of fiscal deficits should not exceed 5 percent of the prior year’s revenue. Still, FG’s new borrowing from the CBN has repeatedly exceeded that limit
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