Alleged mismanagement of N2.73tn in CBN’s interest payments sparks concerns

The Federal Government accuses the Central Bank of Nigeria of misappropriating N2.73tn in interest payments from Ways and Means advances, raising concerns.

 

 

[dropcap]T[/dropcap]he Federal Government has raised serious allegations against the Central Bank of Nigeria (CBN), accusing the institution of misappropriating N2.73 trillion in interest payments from Ways and Means advances.

This accusation, disclosed in the consolidated financial statement for the year ended December 31, 2021, has sparked concerns over the management of government funds.

 

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The report, submitted to the National Assembly by the Auditor-General, Shaakaar Chira, cites that the CBN retained interest charges of N2.73tn, using the funds solely for its benefit rather than returning them to the Consolidated Revenue Fund (CRF).

The Ways and Means facility, which serves as a temporary loan mechanism provided by the CBN to help the government finance budget deficits, has come under scrutiny in light of these allegations.

According to the financial statement, the CRF experienced a negative cash balance of N17.1 trillion as of December 31, 2021, which included N4.4 trillion in Ways and Means advances.

This figure raises questions about the management of the funds and the constitutional violation of unauthorised withdrawals from the CRF, which is prohibited by Nigeria’s 1999 Constitution and the Financial Regulations of 2009.

Section 80(2) of Nigeria’s Constitution mandates that no funds be withdrawn from the CRF without proper approval, while the Financial Regulations specifically forbid overdrafts.

The report also highlights that the CRF and several government ministries, departments, and agencies had overdrawn their accounts, amounting to N17.1tn, with no adequate approvals or supporting documentation.

The breakdown of the CRF’s negative balance included N9.41 trillion for domestic debt service, N4.45 trillion for Ways and Means withdrawals, and N483.97 billion for Paris Club loan refunds, among other components.

The Federal Government has accused the CBN of mismanaging the Ways and Means facility, arguing that the N2.73 trillion interest charges were wrongly retained by the apex bank and should be refunded to the CRF.

The government stressed that the funds were not part of CBN’s balance sheet or a syndicated loan from local or foreign lenders, and thus the interest should not have been kept by the bank.

In response to these allegations, the Auditor-General has called for the immediate refund of the misappropriated N2.73 trillion.

The audit report also questioned the legality of the interest payments, demanding that CBN refrain from securitising the interest charges, unlike other overdraft components managed by the Debt Management Office.

The Auditor-General’s office has maintained that the findings are valid unless the Federal Government can provide adequate evidence of proper approval and documentation for the transactions.

The report further recommended that the Accountant-General of the Federation justify the N17.1 trillion overdraft to the Public Accounts Committees of the National Assembly and ensure that sanctions are applied for any irregular payments from public funds.

Weaknesses in the internal controls at the Office of the Accountant-General have been identified as contributing to these irregularities, which are described as a significant risk to public finance.

The report warned that unauthorised financing of expenditures and unnecessary interest payments could impose undue fiscal burdens on the government, exacerbating Nigeria’s financial challenges.

As the situation develops, questions regarding transparency and the integrity of financial management in Nigeria’s public sector remain a focal point, with the National Assembly likely to pursue further scrutiny and possible sanctions.