CBN records N912bn interest income from W&Ms loans to FG in 1Q

The Central Bank of Nigeria (CBN) earned a total of N912.32 billion from interest payments in the first quarter of 2023 on the Ways and Means (W&Ms) advances to the federal government, according to the Budget Office report.

This substantial figure was reported in the first quarter’s 2023 Budget Implementation Report, released by the Budget Office of the Federation.

The interest payment amount marks a substantial increase of 161.47 percent when compared to the N348.92 billion spent during the same quarter in 2022.

Nigeria’s had initially allocated N1.2 trillion to service the CBN Ways and Means Advances in this year’s budget, translating to approximately N300 billion per quarter. However, the government had already expended about 76.03 percent of its budgeted amount for interest payments on these loans during the first quarter.

Ways and Means Advances serve as a loan facility extended by the Central Bank to support the government during periods of temporary budget deficits, subject to legal limits.

According to Section 38 of the CBN Act, 2007, the central bank can provide temporary advances to the federal government to address temporary budget shortfalls at interest rates set by the bank.

The Act stipulates that the total outstanding advances should not exceed five percent of the previous year’s actual revenue of the Federal Government.

Furthermore, all advances must be repaid as soon as possible, and in any case, no later than the end of the Federal Government’s financial year in which they were granted.

Failure to repay these advances by year-end would limit the central bank’s ability to grant further advances in subsequent years unless outstanding advances are settled.