FG Budgets N1.2tn To Service CBN Loans
The Federal Government plans to spend N1.2tn on servicing the loans it got from the Central Bank of Nigeria (CBN) through the Ways and Means Advances.
Ways and Means Advances is a loan facility used by the central bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law.
According to The Punch, the 2023 fiscal framework document showed that the Federal Government allocated N6.31tn to service its total debts.
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.
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.