The Federal Government has accused the Central Bank of Nigeria (CBN) of misappropriating ₦2.73 trillion in interest payments from Ways and Means advances, raising significant concerns about irregularities in the management of public funds.
This allegation was detailed in the Federal Government’s consolidated financial statement for the year ending December 31, 2021.
The statement, submitted to the National Assembly by Auditor-General Shaakaar Chira, was referenced as AuGF/AR.2021/01 and dated July 31, 2024.
At the center of the controversy is the Ways and Means facility, a temporary loan mechanism provided by the CBN to bridge budget deficits.
According to the Auditor-General’s report, the Federal Government accused the CBN of retaining ₦2.73 trillion in interest charges for its exclusive use rather than transferring the funds to the Consolidated Revenue Fund (CRF).
By the end of 2021, the CRF’s negative cash balance had risen to ₦17.1 trillion, which included ₦4.4 trillion in Ways and Means advances.
The 1999 Constitution of the Federal Republic of Nigeria (as amended) and the Financial Regulations of 2009 strictly forbid unauthorized withdrawals from the CRF or overdrawn government accounts.
Section 80(2) of the Constitution mandates that no funds may be withdrawn from the CRF without legislative approval via an appropriation or supplementary act. Similarly, paragraph 710 of the Financial Regulations prohibits overdrafts and requires that any interest charges incurred be refunded.
Despite these legal provisions, the report revealed that the CRF, along with four other ministries, departments, and agencies (MDAs), had overdrawn accounts totaling ₦17.1 trillion without proper approvals or documentation.
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The breakdown of the CRF’s negative balance included ₦9.41 trillion for reconciled domestic debt service, ₦4.45 trillion for Ways and Means withdrawals, and ₦483.97 billion for Paris Club loan refunds. Other components of the overdrawn balance comprised 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, asserted that the CBN had mismanaged the Ways and Means facility, treating it as if the funds were loans from its own balance sheet or a syndicated facility sourced from local or foreign lenders.
It further contended that the N2.73 trillion in interest charged on these advances was improperly retained by the apex bank and demanded its immediate refund to the Consolidated Revenue Fund (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 directed that interest charges should not be securitized, unlike other components of the overdraft managed by the Debt Management Office.
In its assessment, the Office of the Auditor-General asserted that its findings would remain valid unless the Federal Government provided evidence of proper approvals and documentation for the transactions.
The Auditor-General recommended that the Accountant-General of the Federation explain the N17.1tn overdraft to the Public Accounts Committees of the National Assembly and enforce the sanctions prescribed in paragraph 3106 of the Financial Regulations for irregular payments from public funds.
The audit report attributed these irregularities to deficiencies in the internal control systems within the Office of the Accountant-General of the Federation, characterizing the situation as a significant risk to public finances.
It cautioned that unauthorized expenditure financing and avoidable interest payments subjected the government to unnecessary fiscal pressures.
(Punch)
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