Following the federal government’s failure to meet its revenue targets in 2020, the Central Bank of Nigeria (CBN) lent sum of N2.8 trillion to President Buhari’s administration.
This was disclosed by the minister for finance, Zainab Ahmed, during a public presentation of the 2021 FGN Approved Budget Breakdown & Highlights.
Ahmed attributed the government’s failure to the impact of the fall in oil prices and COVID-19 pandemic.
Analysing the apex bank’s support, she said it came in form of Ways and Means, a provision in the CBN’s act that allows the government to borrow from the body.
According to her, out of the 2020 budget deficit of N6.1 trillion, N2 trillion was sourced from domestic borrowing, and another N12 trillion from foreign borrowing.
She explained further that out of the N5.3 trillion in the budgeted revenue, only N3.9 trillion was generated as actual, resulting in a 27% revenue shortfall for the year.
The minister added that the shortfall in revenues and increased spending resulted in an actual deficit spending of N6.1 trillion as against N4.6 trillion budgeted during the year
Nigeria also increased its debt service from N2.9 trillion to N3.2 trillion. Interest on Ways and Means totaling N912.5 billion contributed significantly to the cost.
The provision also requires that the loans are repaid at the end of the year or else the CBN will no longer be able to lend to the government in the following year.