The Federal Government has opted to repay its N20 trillion loans advance or overdraft with the Central Bank of Nigeria (CBN) with securities, Treasury Bills and Bonds’ issuance, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has said.
Mrs. Ahmed, who spoke yesterday during the 2023 budget breakdown in Abuja, said President Muhammadu Buhari has approved the securitisation of CBN’s N20 trillion overdraft. Consequently, the Federal Government can issue securities like treasury Bill, Bonds Certificates and other security instruments to repay what it owes the apex bank.
The Minister also put the value of the Federal Government’s assets under the management of the Ministry of Finance Incorporated (MoFI) at N30 trillion. This is the first time the amount the CBN has loaned to the Federal Government has been given public affirmation.
Mrs. Ahmed, while responding to questions from reporters, said: “The total Ways and Means is N20trillion and President Muhammadu Buhari has given approval to securitise. The securitisation will be over a 40-year period with an interest rate of nine per cent.
“Over the years, we have been paying the interest component at the current rate that is charged on the Ways and Means,” adding that the Federal Government has budgeted N1.2 trillion to offset some Ways and Means liabilities in 2023.
Section 38 sub-section 3(b) of the 2007 CBN Act states: “In such form as the bank (CBN) may determine provided that no repayment shall take the form of a promissory note or such other promise to pay at a future date or securitisation by way of issuance of treasury bills, bonds, certificates or other forms of security which is required to be underwritten by the bank.”