The Federal Government’s total borrowing from the Central Bank of Nigeria through Ways and Means Advances rose from N17.46tn in December 2021 to N19.91tn in June 2022.

According to data from the CBN, this shows that the Federal Government borrowed N2.45tn from the apex bank within six months.

The N19.91tn owed the apex bank by the Federal Government is not part of the country’s total public debt stock, which stood at N41.60tn as of March 2022, according to the Debt Management Office.

The public debt stock only includes the debts of the Federal Government of Nigeria, the 36 state governments, and the Federal Capital Territory.

Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget.

According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government with regard to temporary deficiency of budget revenue at such rate of interest as the bank may determine.

The Act read in part, “The total amount of such advances outstanding shall not at any time exceed five 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.”

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 monetary base leading to adverse effect on domestic prices and exchange rates i.e macroeconomic instability because of excess liquidity that has been injected into the economy,” it said.

The World Bank had, in November last year, warned the Nigerian government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this put fiscal pressures on the country’s expenditures.

Despite warnings from experts and organisations, the Federal Government has kept borrowing from the CBN to fund budget deficits.

The PUNCH had reported that the Federal Government paid an interest of N2.03tn from January 2020 to November 2021 on the loans it got from the CBN through the Ways and Means Advances.

It was also reported that Federal Government paid an interest of N405.93bn from January 2022 to April 2022 on the loans it got from the CBN.


The Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, said the central bank lending put pressure on the exchange rate and the inflation rate, with “liquidity that has no productivity attached to it coming into the system.”

A development economist, Aliyu Ilias, said the refusal of the government to remove petrol subsidy had significantly increased expenditure, forcing the government to resort to borrowing to close its widening fiscal deficit.

He advised the government to seek better ways of generating revenue, such as widening its tax net and privatising its assets.

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