By 
In the first quarter of 2023, the Federal Government of Nigeria paid a total interest of N912.32 billion on loans obtained from the Central Bank of Nigeria (CBN) through Ways and Means Advances, according to data from the Q1, 2023 Budget Implementation Report by the Budget Office of the Federation.
This interest payment represents a significant increase of 161.47% compared to the N348.92 billion spent on interest during the same quarter in 2022.
Earlier reports had indicated that the Federal Government planned to allocate N1.2 trillion for servicing the loans acquired from the CBN through Ways and Means Advances, with an estimated quarterly expenditure of approximately N300 billion.
However, as of the end of the first quarter, the government had already utilized 76.03% of its budget allocated for interest payments on these advances.
Ways and Means Advances is a loan facility offered by the central bank to finance the government during periods of temporary budget shortfalls, subject to limits imposed by law.
As per Section 38 of the CBN Act, 2007, the central bank may extend temporary advances to the Federal Government to address temporary budget revenue shortfalls, with interest rates determined by the bank. The total amount of such advances should not exceed five per cent of the previous year’s actual revenue of the Federal Government.
The Act further mandates that all advances should be repaid as soon as possible and no later than the end of the Federal Government’s financial year in which they are granted. Failure to repay the advances by the end of the year restricts the central bank’s ability to grant further advances in subsequent years.
It is noteworthy that the House of Representatives of the 9th National Assembly, with the concurrence of the Senate, approved an amendment to the CBN Act, raising the ceiling for Ways and Means Advances from five to 15 per cent of the Federal Government’s previous year’s revenue. This decision came amidst criticism that the government had exceeded the five per cent threshold previously established by the CBN Act.
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