The Federal Government has accused the Central Bank of Nigeria of misappropriating N2.73tn in interest payments from Ways and Means advances, raising serious concerns over irregularities in managing government funds.
The allegation was disclosed in the consolidated financial statement of the Federal Government for the year ended December 31, 2021, submitted to the National Assembly by the Auditor-General, Shaakaar Chira, with reference number AuGF/AR.2021/01 and dated July 31, 2024.
The Ways and Means facility, a temporary loan mechanism provided by the CBN to the government to finance budget deficits, is at the centre of the controversy.
According to the report, the Federal Government claimed that the CBN retained interest charges amounting to N2.73tn, using the funds “for its sole benefit” rather than returning them to the Consolidated Revenue Fund.
The negative cash balance of the CRF stood at N17.1tn as of December 31, 2021, a figure which also included N4.4tn in Ways and Means advances.
The Constitution of the Federal Republic of Nigeria, 1999 (as amended), and the Financial Regulations of 2009 strictly prohibit unauthorised withdrawals from the CRF or overdrawn government accounts.
Section 80(2) of the Constitution states that no funds shall be withdrawn from the CRF without approval by an appropriation act or supplementary act, while paragraph 710 of the Financial Regulations bars overdrafts and mandates that any interest incurred must be refunded.
The report, however, revealed that the CRF and four other ministries, departments, and agencies had overdrawn accounts totalling N17.1tn, a figure not supported by appropriate approvals or documentation.
The breakdown of the CRF’s negative balance included N9.41tn for reconciled domestic debt service, N4.45tn for Ways and Means withdrawals, and N483.97bn for Paris Club loan refunds.
Other components included deferred state loan deductions and CPV coupon payments.
The report read, “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.”
The Federal Government, in its response, stated that the CBN had mismanaged the Ways and Means facility, treating it as though the funds were loans from its balance sheet or a syndicated facility from local or foreign lenders.
It argued that the N2.73tn interest charged on these advances was wrongly retained by the apex bank and called for its immediate refund to the CRF.
The report noted, “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.
“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.”
The government further instructed that the interest charges should not be securitised, unlike other components of the overdraft being handled by the Debt Management Office.
The Office of the Auditor-General, in its evaluation, maintained that the findings remained valid until the Federal Government provided evidence of proper approvals and documentation for the transactions.
The Auditor-General recommended that the Accountant-General of the Federation justify the N17.1tn overdraft to the Public Accounts Committees of the National Assembly and ensure that sanctions outlined in paragraph 3106 of the Financial Regulations were applied for irregular payments from public funds.
The audit report attributed the irregularities to weaknesses in the internal control processes at the Office of the Accountant-General of the Federation, describing the situation as a significant risk to public finance.
It warned that the unauthorised financing of expenditures and avoidable interest payments exposed the government to unnecessary fiscal burdens.
Madukwe B. Nwabuisi is an accomplished journalist renown for his fearless reporting style and extensive expertise in the field. He is an investigative journalist, who has established himself as a kamikaze reporter.