Despite the restructuring plan, the World Bank forecasts that interest payments on the Nigerian Government’s borrowing from the Central Bank of Nigeria (CBN) will consume around 62 percent of government revenue by 2027.
This was disclosed by the Washington-based bank in its recently issued Nigeria Development Update for December 2022.
The report, “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 percent of revenues.”
Recall that during the course of 10 months, the Federal Government borrowed N6.31 trillion from the CBN. 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.
Additionally, the World Bank had advised the Nigerian government against funding deficits by borrowing from the CBN through the Ways and Means Advances in November of last year, claiming that doing so would put fiscal pressure on the nation’s expenditures.
The Federal Government has continued to borrow money from the CBN to cover budget deficits in spite of recommendations from experts and groups.
From January 2020 to November 2021, the Federal Government paid N2.03 trillion in interest on the loans it obtained from the CBN under the Ways and Means Advances.
On the loans it received from the CBN, the Federal Government reportedly paid interest of N405.93 billion between January 2022 and April 2022.
