CONCERNS ABOUT inconsistencies and irregularities in the management of government finances have been raised by the Federal Government’s accusation that the Central Bank of Nigeria embezzled N2.73 trillion in interest payments from Ways and Means loans.
This allegation was made in the Federal Government’s consolidated financial account for the fiscal year that concluded on December 31, 2021, which was sent to the National Assembly by Auditor-General Shaakaar Chira on July 31, 2024, with reference number AuGF/AR.2021/01.
At the heart of the dispute is the CBN’s Ways and Means facility, a short-term credit mechanism that the government uses to fund budget deficits.
The Federal Government asserted in the report that the CBN kept interest charges of N2.73 trillion, utilising the money “for its sole benefit” instead of returning it to the Consolidated Revenue Fund (CRF).
As of December 31, 2021, the CRF’s negative cash balance was N17.1 trillion, which also included N4.4 trillion in Ways and Means advances.
The Financial Regulations of 2009 and the Federal Republic of Nigeria’s 1999 (as modified) Constitution both restrict unauthorised withdrawals from the CRF or overdrawn government accounts.
Although paragraph 710 of the Financial Regulations prohibits overdrafts and requires that any interest accrued be reimbursed, Section 80(2) of the Constitution stipulates that no money shall be withdrawn out of the CRF without authorisation from an appropriation act or supplemental act.
On the contrary, the CRF and four other ministries, departments, and agencies had overdrawn accounts worth N17.1 trillion, according to the report. This amount was not supported by the necessary clearances or appropriate approval.
The CRF’s negative balance was broken down as follows: N483.97 billion for Paris Club loan returns, N4.45 trillion for Ways and Means withdrawals, and N9.41 trillion for reconciled domestic debt payments.
CBN
Deferred state loan deductions and CPV coupon payments were additional elements.
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“The CRF negative balance of (N17,105,111,709,523.00) as at 31st December 2021 included actual Ways and Means advance of N4.4 trillion taken by Government and interest charged on it for the sole use of CBN as though the Ways and Means a loan from CBN funds or from any syndicated group of lenders,” according to the report.
Reacting to this finding, the Federal Government claimed that the CBN had mishandled the Ways and Means facility, misrepresenting the money as either a syndicated facility from domestic or foreign lenders or loans from its balance sheet.
It maintained that the apex bank had improperly kept the N2.73 trillion interest that was assessed on these advances and demanded that the CRF get a prompt reimbursement.
“The interest charged on Ways and Means by CBN was misappropriated by CBN for its sole use whereas the Actual Ways and Means was not a facility from its funds or balance sheet, nor was it a syndicated facility from a group of local and foreign lenders,” the report stated.
“CBN must therefore refund to the Federal Government of Nigeria the interest of N2.73 trillion it cornered for its sole use as of 31st December 2021.”
While the Debt Management Office is handling other aspects of the overdraft, the government also directed that the interest charges not be securitised.
In its assessment, the Office of the Auditor-General insisted that the conclusions were still valid until the Federal Government confirmed that the transactions had been properly approved and documented.
In order to ensure that the penalties specified in paragraph 3106 of the Financial Regulations were applied for irregular payments from public funds, the Auditor-General advised the Accountant-General of the Federation to provide the National Assembly’s Public Accounts Committees with a justification for the N17.1 trillion overdraft.
The audit report described the situation as an imminent risk to public finances and ascribed the anomalies to weaknesses in the Office of the Accountant-General of the Federation’s internal control procedures.
It cautioned that unapproved expenditures and avoidable interest payments put the nation at needless financial burdens.
