The Nigerian government says it will convert the N10 trillion loans it owes the Central Bank of Nigeria (CBN) into a 30-year bond.
The ‘indebtedness’ to the CBN was largely by Ways and Means advances – temporary loan facilities to the Government granted by the apex bank, traditionally through printing of more money, to fund budget shortfall.
The Director-General of the Debt Management Office, DMO, Patience Oniha, said that the Federal Government of Nigeria is owing the CBN a whopping sum of about N10 trillion (about $25 billion).
Oniha, who disclosed this at a virtual meeting with investors and analysts Friday, said the debt will be converted into bonds by the CBN to fill the huge deficit gap created by the whopping N10 trillion Ways and Means advance.
Analysts have described this as one of the longest borrowing sprees on record from the CBN’s Ways and Means.
Oniha further explained that the decision to convert the huge “borrowing” into bonds was taken as the government’s borrowing via Ways and Means was no longer sustainable.
“The Ways and Means of about N10 trillion will be formalized and converted into bonds and paid back over the next 30 years.
“There will be a moratorium of principal for the first two years and the bonds will not be sold in the open market but to select investors”, Oniha told the audience.
She said further, “This move seeks to not just formalize the CBN’s lending to the government but also make it somewhat legal for the government’s past and perhaps future borrowing”.
In 2020, the government borrowed about N2.9 trillion from the CBN via Ways and Means to fund a budget deficit of about N6.1 trillion.
At a N10 trillion balance, analysts say that Patience Oniha’s comment suggests that the CBN has been funding Ways and Means since 2015.