The Federal Government has leveled serious allegations against the Central Bank of Nigeria, accusing the apex bank of misappropriating N2.73 trillion in interest payments on Ways and Means advances.
This claim, which raises critical concerns about the management of public funds, was disclosed in the Federal Government’s consolidated financial statement for the year ending December 31, 2021.
The report, submitted by the Auditor-General Shaakaar Chira to the National Assembly on July 31, 2024, bore the reference number AuGF/AR.2021/01.
At the heart of the controversy lies the Ways and Means facility, a short-term loan mechanism provided by the CBN to bridge budget deficits.
According to the report, the Federal Government alleged that the CBN retained N2.73 trillion in interest charges from this facility, using the funds “for its sole benefit” instead of remitting them to the Consolidated Revenue Fund (CRF).
As of December 31, 2021, the CRF reported a negative cash balance of N17.1 trillion, which included N4.4 trillion in Ways and Means advances.
The 1999 Constitution of the Federal Republic of Nigeria (as amended) and the Financial Regulations of 2009 explicitly prohibit unauthorised withdrawals from the CRF or overdrawing government accounts.
Section 80(2) of the Constitution mandates that no withdrawals shall occur from the CRF without approval by an appropriation or supplementary act.
Additionally, paragraph 710 of the Financial Regulations prohibits overdrafts and requires any interest incurred to be refunded.
The audit report detailed that the CRF and four other government entities had overdrawn accounts amounting to N17.1 trillion without necessary approvals or supporting documentation.
This figure included N9.41 trillion for reconciled domestic debt service, N4.45 trillion for Ways and Means advances, and N483.97 billion for Paris Club loan refunds. Other components were deferred state loan deductions and CPV coupon payments.
“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 report stated.
The Federal Government, in its response, criticized the CBN’s handling of the Ways and Means facility, alleging that the bank treated it as though the funds were loans from its balance sheet or syndicated from other lenders. It demanded an immediate refund of the N2.73 trillion interest charges to the CRF.
“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 read. “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.”
Furthermore, the government instructed that the interest charges should not be securitised, unlike other overdraft components being managed by the Debt Management Office.
The Office of the Auditor-General underscored that its findings would stand unless the Federal Government provided evidence of appropriate approvals and documentation for the transactions.
It urged the Accountant-General of the Federation to justify the N17.1 trillion overdraft before the National Assembly’s Public Accounts Committees and recommended sanctions in line with paragraph 3106 of the Financial Regulations for any irregular payments from public funds.
The report identified weaknesses in the internal controls of the Office of the Accountant-General of the Federation as a root cause of the irregularities, warning that such lapses posed significant risks to public finance.
It cautioned that unauthorised expenditures and avoidable interest payments imposed unnecessary fiscal burdens on the government.
