If the National Assembly grants the president’s request to reorganize the Ways and Means Advances, Nigeria’s public debt load might reach N77 trillion.
The Central Bank of Nigeria uses a borrowing instrument called Thee Ways and Means Advances to pay for budgetary gaps in the government.
In 2022, the Federal Government would spend N5.24 trillion on debt payments.
During the public presentation of the 2023 budget, which was hosted by the Minister of Finance, Budget, and National Planning, Dr. Zainab Ahmed, the Director-General of the Debt Management Office, Patience Oniha, made this announcement on Wednesday.
But she added that without N5 trillion in additional borrowing and N2 trillion in promissory notes, the debt would be N70 trillion.
According to Oniha, “The DMO released the figure for the country’s debt stock as at September, you don’t expect it to be significantly different from December. Secondly, there are a lot of discussions on the Ways and Means. In addition to the significant costs saving in loans service we would get by securitizing it.
“There is an element of transparency in the sense that it is now reflected in the public debt stock. Once it is passed by the National Assembly, it means we will be seeing that figure included in the public debt. You will see a significant increase in public debt to N77tn.”
According to her, revenue is becoming increasingly important even while the debt is increasing due to additional borrowing.
“Like DMO always says, you can’t talk about debt without talking about revenue. We need the two to work together.”
The country’s debt stock increased to N44.06 trillion as of September last year as a result of the FG’s enormous appetite for borrowing under the current administration.
Experts and significant economic players had attacked the DMO and the government over the nation’s escalating debt levels.
A proposal for approval of a restructure of the Ways and Means Advances worth N23.7 trillion was recently sent to the National Assembly by President Major General Muhammadu Buhari (ret.).
The appeal from Buhari was read aloud to the members of each chamber at the session on December 21 by the presidents of the Senate and House of Representatives, Ahmad Lawan and Femi Gbajabiamila, respectively.
In the request’s titled, ‘Restructuring of Ways and Means Advances,’ the President wrote, “The Ways and Means Advances by the Central Bank of Nigeria to the Federal Government has been a funding option to the Federal Government to cater for short-term or emergency finance to fund delayed government expected cash receipt of fiscal deficit.
“The Ways and Means balances as of 19th December 2022, is N23,719,703,774,306.90. I have approved the securitization of the Ways and Means balances along the following terms: amount, N23.7tn; tenure, 40 years; moratorium on principal repayment, 3 years; pricing interest rate, 9 per cent. Your concurrence and approval is sought to allow for the implementation of the same.”
The Senate, however, turned down the President’s request to reorganize the N23.7 trillion Ways and Means advances.
