This revelation came to light through the 2021 consolidated financial statement of the Federal Government, submitted to the National Assembly by the Auditor-General, Shaakaar Chira.
The Federal Government has accused the Central Bank of Nigeria (CBN) of misappropriating N2.73 trillion in interest payments on Ways and Means advances, spotlighting alleged irregularities in the management of public funds.
This revelation came to light through the 2021 consolidated financial statement of the Federal Government, submitted to the National Assembly by the Auditor-General, Shaakaar Chira.
The report, referenced AuGF/AR.2021/01 and dated July 31, 2024, detailed the contentious financial dealings.
The Ways and Means facility, designed as a temporary loan mechanism for financing government budget deficits, is at the core of the controversy.
According to the Auditor-General’s report, the CBN retained N2.73 trillion in interest charges, allegedly utilizing the funds “for its sole benefit” instead of remitting them to the Consolidated Revenue Fund as required.
The Consolidated Revenue Fund (CRF) recorded a negative cash balance of N17.1 trillion as of December 31, 2021, including N4.4 trillion in Ways and Means advances.
This contravenes provisions of the 1999 Constitution (as amended) and the 2009 Financial Regulations, which prohibit unauthorized withdrawals or overdrafts from government accounts.
Section 80(2) of the Constitution mandates that no funds can be withdrawn from the CRF without approval through an appropriation or supplementary act.
Similarly, paragraph 710 of the Financial Regulations bans overdrafts and requires any interest incurred to be refunded.
According to an audit report, the CRF and four other ministries, departments, and agencies (MDAs) collectively held overdrawn accounts totaling N17.1 trillion without appropriate approvals or supporting documentation.
A breakdown of the CRF’s negative balance revealed N9.41 trillion allocated for domestic debt service, N4.45 trillion for Ways and Means withdrawals, N483.97 billion for Paris Club loan refunds, and additional amounts for deferred state loan deductions and CPV coupon payments.
The report highlighted, “The CRF’s negative balance of N17.1 trillion as of December 31, 2021, included N4.4 trillion in Ways and Means advances, along with interest charged by the Central Bank of Nigeria (CBN), which treated these funds as if they were loans sourced from its balance sheet or a syndicated group of lenders.”
The Federal Government accused the CBN of mismanaging the Ways and Means facility, arguing that N2.73 trillion in interest charges was wrongfully retained by the apex bank. It called for the immediate refund of the interest to the CRF.
The report stated, “The interest charged on Ways and Means by the CBN was misappropriated for its sole use, despite the facility not being sourced from its balance sheet or external lenders. The CBN must refund the N2.73 trillion to the Federal Government.”
The government also directed that interest charges should not be securitised, unlike other overdraft components managed by the Debt Management Office (DMO).
The Office of the Auditor-General emphasized that the findings would remain valid until the Federal Government provided evidence of proper approvals and documentation.
It recommended that the Accountant-General of the Federation justify the N17.1 trillion overdraft before the Public Accounts Committees of the National Assembly.
Meanwhile, it also urged enforcement of sanctions under paragraph 3106 of the Financial Regulations for irregular payments.
However, the report attributed the irregularities to weaknesses in internal controls at the Office of the Accountant-General, warning that unauthorised expenditures and unnecessary interest payments posed a risk to public finance and increased the country’s fiscal burden.