The rising level of Nigeria’s Public Debt is due to the abuse of the Ways and means which was meant as an instrument of short Term Lending but has now unfortunately graduated into the main source of public funding from the Central Bank of Nigeria.
Economist and Executive Director of the Centre for the Promotion of Private Enterprise, Dr Muda Yussuf, disclosed this while speaking on the moves by the Federal Government to convert its Ways and Means loans from the Central Bank of Nigeria into debt.
The Ways and Means Loans from the Central Bank of Nigeria has reached over 22 Trillion Naira.
Dr Yussuf added that the Ways and Means which was designed as a short term loan to bridge the shortfall between Revenue and expenditure has now become a major issue.
He said the Ways and Means is designed as an Inflation Tax which comes at a huge cost to Nigeria.
He disclosed that the Central Bank of Nigeria which has been working to reduce excess liquidity through various means is actually the biggest culprit in creating excess liquidity in the system.
He said the Ways and Means from the CBN Act is not supposed to be more than 5 Percent of the previous year’s revenue and that the CBN cannot provide additional financing without the repayment of the previous overdraft or Loan extended to the Federal Government.
He said financing deficit in any Economy by the Central Bank is highly inflationary.
He said the issue has raised some constitutional issues and abuse of the Act governing the Operations of the Central Bank of Nigeria.
For his part, Oludayo Elemo, a Financial analyst, the abuse of the Ways and Means predates the administration of President Muhammadu Buhari but adds that the National Assembly should be looking at the fact the Central Bank of Nigeria went over the legally acceptable limit.
He said the National Assembly should be looking even how the expended loans from the Central Bank of Nigeria has been spent.
He described the current situation as one that bothers on recklessness asking why a nation that has a Fiscal crisis on its hands will be spending the way the Federal Government has been spending.
He said failure of the National Assembly to address the issue will be setting a bad precedent for future governors of the Central Bank of Nigeria.
He described the current crisis as defying logic.
He also accused the National Assembly of not doing the right thing since if they had spotted the abuses earlier it would have been stopped and inflation across board would have been brought to a halt far longer than what is now being done.
He said the National Assembly should be worried about this abuses and do something fast about it.
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