Nigeria’s Total Debt Now Exceeds N$61 Trillion; Analysis of the available data THE PIPER has shown.
Statistics obtained by the Debt Management Office on Monday showed that the country’s national debt stood at N$41.6 trillion as of March 31.
Further figures obtained from the Central Bank of Nigeria showed that the federal government owes the top bank N19.91 trillion.
The federal government borrows money from the CBN under Ways and Means Advances to fund budget deficits.
Thus, the total debt of Nigeria and the money borrowed from the top bank add up to N61.51 trillion.
The findings show that borrowing from CBN violates CBN law, which requires the federal government to liquidate its debt with the top bank before borrowing new.
However, the federal government has consistently failed to liquidate its debts to the lender of last resort, instead continually borrowing from them.
The top bank, on the other hand, has failed to exercise its power to deny loans to the federal government, which the law empowers it to do.
Further research showed that Ways and Means Advances debt increased to unprecedented levels during President Muhammadu Buhari’s tenure.
Federal government borrowings from the bank totaled N648.26 billion in June 2015, a month after Buhari came to power. Recall that on May 29, 2015, Buhari took over the government from President Goodluck Jonathan.
However, by June of this year, Ways and Means Advances to the federal government had increased to N19.91 trillion.
This means that Buhari has borrowed N$N19.90 trillion from CBN in seven years. This shows a 3,070.29 percent increase in the manner of funding over a seven-year period under Buhari.
Section 38 of the CBN Act 2007 provides that outstanding advances to the government should at no time exceed five per cent of the previous year’s actual revenue.
It also authorizes the top bank to refuse further advances if the federal government cannot repay the outstanding loans.
The CBN Act states: “The aggregate amount of such outstanding advances shall at no time exceed five percent of the previous year’s actual federal revenue.
“All advances are to be repaid as quickly as possible, at least by the end of the Federal Government’s budget year in which they were granted, and if the advances remain unpaid at the end of the year, the Bank’s authority to grant such further advances in a subsequent year is is not exercisable unless the outstanding advances have been repaid.”
The Treasury had announced that federal revenue for 2020 was N$3.9 trillion, N$1.46 trillion less than the government’s target of N$5.36 trillion.
Between January and November 2021, the federal government received a total of N5.51 trillion in revenue. That’s N2.62 trillion less than the N8.13 trillion the government had hoped to reach.
However, by the first six months of the year, January through June 2022, the federal government had already borrowed N2.45 trillion from the CBN through Ways and Means Advances. That is already 44.46 percent of the revenue that the federal government generated in 2021.
At N19.91 trillion, the federal government’s total outstanding debt is much higher than five percent of last year’s government revenue, which totaled N5.51 trillion (as of November 2021). In fact, it’s 361.34 percent of the state’s revenue last year.
In doing so, the federal government has not remained true to the CBN law, according to which the outstanding Ways and Means Advances should at no time exceed five percent of the previous year’s income.
Available statistics show that Ways and Means Advances increased to N856.33 billion as of December 31, 2015. It then rose to N2.23 billion by December 2016; N3.31 trillion by December 2017; N5.41 trillion by December 2018; N8.72 trillion by December 2019; and N13.11tn through December 2020.
By the end of December 2021, the federal government’s total debt to the top bank had risen to N17.46 trillion and increased further to N19.91 trillion in the first six months of 2022.
Edo State Governor Godwin Obaseki had flagged the federal government’s over-borrowing of CBN on April 8, 2021, when he said the federal government was printing money to distribute to the three tiers of government.
Obaseki had said, “When we got to the FAAC (Federal Accounts Allocation Committee) for March, the federal government printed extra N50-N60bn to top up and share for us.
“This April we will go to Abuja and share. By the end of this year our total debt will be between N15 and N16 trillion. Imagine a family just borrowing money with no funds to repay and no one is looking at it, everyone is looking towards 2023.
“Nigeria has changed. Nigeria’s economy isn’t the same anymore, whether we like it or not. Since the Civil War we have managed; to say that money is not our problem as long as we pump crude every day.”
The governor continued, “So we’ve been running a very weird economy and a weird presidential system where the local, state and federal governments go and earn salary at the end of the month. We are the only country in the world that does that.
“Everywhere else the government relies on the people to collect taxes and that’s what they use to run the local government, the state and the federation.
“But the way we run Nigeria, the country can go to sleep. At the end of the month we just go to Abuja, raise money and come back to spend it. We are in trouble, in huge financial trouble.”
Excluding Ways and Means funding, Nigeria’s total public debt was N41.6 trillion as of March 31, according to statistics released by the Debt Management Office in June.
Breaking down the figure showed that the federal government’s domestic debt accounted for N20.14 trillion, or 48.42 percent of the country’s total public debt.
The domestic debt of the sub-national governments, made up of 36 states in the federation and the federal capital area, was N$4.84 trillion, or 11.64 percent.
External debt accounted for N16.62 trillion, or 39.94 percent of the nation’s debt burden. Although the DMO did not distinguish between state and federal foreign liabilities, most foreign debt has traditionally been assumed by the federal government.
In December 2021, the federal government’s share of foreign debt was 88 percent, and the federal states’ share of foreign debt was 12 percent.
As of June 30, 2015, about a month after the inauguration of the current government led by President Muhammadu Buhari, Nigeria’s total debt was N$12.12 trillion.
That means the country’s debt profile has increased by N29.48 percent, or 243.23 percent, in seven years without CBN’s ways and means.
DMO Director General Patience Oniha had hinted at plans in 2021 to include Ways and Means Advances as part of the national debt. However, at the time of writing this report, this plan has not yet materialized.
If it had happened, the country’s debt portfolio would be as high as N61.51 trillion. Again, this would eliminate debt to contractors who delivered government-ordered jobs.
The rise in the country’s debt portfolio has led to a gradual rise in debt service costs, with debt service threatening to eclipse government revenues.
In 2020, for example, servicing the federal government’s domestic debt swallowed a total of N1.85 trillion.
Similarly, the foreign debt service swallowed $1.56 billion. This was in a year when federal government revenue stood at N3.9 trillion.
The following year, 2021, the federal government spent N$2.05 trillion on domestic debt servicing, according to the DMO. The External Debt Service swallowed $2.11 billion that same year.
Also, the federal government reportedly paid N2.03 trillion in interest on the Ways and Means Advances received from the CBN from January 2020 to November 2021 and N405.93 billion for the period January to April 2022.