CBN Misappropriated N2.7tn Interest On Ways, Means Facility – Auditor-General

Abuja, Nigeria- The Central Bank of Nigeria (CBN) has been accused of misappropriating N2.73 trillion in interest payments from the Ways and Means advances.

This revelation is contained in the Federal Government’s consolidated financial statement for the year ending December 31, 2021, which was submitted to the National Assembly by the Auditor-General, Shaakaar Chira.

The report, referenced AuGF/AR.2021/01 and dated July 31, 2024, highlights alleged discrepancies in how interest payments were handled.

The Ways and Means facility is a temporary loan mechanism that allows the CBN to finance government budget deficits.

However, the Auditor-General’s report alleges that the CBN retained N2.73 trillion in interest charges and used the funds “for its sole benefit” instead of remitting them to the Consolidated Revenue Fund.

The Consolidated Revenue Fund (CRF) had a negative cash balance of ₦17.1 trillion as of December 31, 2021, which included ₦4.4 trillion in Ways and Means advances.

According to the 1999 Constitution of the Federal Republic of Nigeria (as amended) and the 2009 Financial Regulations, unauthorised withdrawals from the CRF or overdrafts in government accounts are strictly prohibited.

Section 80(2) of the Constitution mandates that no funds can be withdrawn from the CRF without approval through an appropriation or supplementary act.

Additionally, paragraph 710 of the Financial Regulations bans overdrafts and requires the refund of any interest incurred.

An audit report revealed that the CRF, along with four other ministries, departments, and agencies, had overdrawn accounts amounting to ₦17.1 trillion without appropriate approvals or documentation.

The CRF’s negative balance was attributed to ₦9.41 trillion for reconciled domestic debt servicing, ₦4.45 trillion in Ways and Means withdrawals, ₦483.97 billion for Paris Club loan refunds, as well as deferred state loan deductions and CPV coupon payments.

The report stated:
“The CRF negative balance of ₦17.1 trillion as of December 31, 2021, included ₦4.4 trillion in actual Ways and Means advances taken by the government, with interest charged as if the funds were loans sourced from the CBN’s balance sheet or a syndicated group of lenders.”

The Federal Government accused the Central Bank of Nigeria (CBN) of mismanaging the Ways and Means facility, alleging that the ₦2.73 trillion in interest charged was wrongly retained by the bank.

It demanded an immediate refund to the CRF, stating that the interest charges were inappropriately appropriated.

The report noted:
“The CBN misappropriated ₦2.73 trillion in interest charges, treating the Ways and Means advances as a loan from its funds, which was not the case. This interest must be refunded to the Federal Government.”

The government further directed that the interest charges should not be securitised, unlike other components of the overdraft managed by the Debt Management Office.

The Office of the Auditor-General concluded that the findings remained valid unless the government provided evidence of proper approvals and documentation for the transactions.

It recommended that the Accountant-General of the Federation justify the ₦17.1 trillion overdraft before the Public Accounts Committees of the National Assembly.

It also called for sanctions under paragraph 3106 of the Financial Regulations for irregular withdrawals.

The report attributed the irregularities to weaknesses in internal controls at the Office of the Accountant-General of the Federation, warning that unauthorised expenditures and unnecessary interest payments posed a risk to public finances and burdened the government with avoidable fiscal pressures.