Federal Government Accuses CBN of Misappropriating N2.73 Trillion in Interest Payments

The Federal Government of Nigeria has accused the Central Bank of Nigeria (CBN) of misappropriating N2.73 trillion in interest payments from the controversial Ways and Means advances. This revelation, detailed in the consolidated financial statement for the year ending December 31, 2021, raises significant concerns about the management of public funds.

The Allegations

According to the report submitted to the National Assembly by the Auditor-General, Shaakaar Chira, the CBN allegedly retained interest charges on Ways and Means advances for its own benefit rather than transferring the funds to the Consolidated Revenue Fund (CRF).

The Ways and Means facility is a temporary loan mechanism provided by the CBN to finance government budget deficits. However, the report alleges that the CBN treated the funds as though they were loans from its balance sheet or a syndicated facility from local or foreign lenders.

CRF Negative Balance and Unauthorized Withdrawals

The audit report revealed a negative cash balance of N17.1 trillion in the CRF as of December 31, 2021. This figure includes:

  • N9.41 trillion for domestic debt service.
  • N4.45 trillion for Ways and Means withdrawals.
  • N483.97 billion for Paris Club loan refunds.

The Constitution of the Federal Republic of Nigeria (1999, as amended) and the Financial Regulations of 2009 strictly prohibit unauthorized withdrawals from the CRF. Section 80(2) of the Constitution mandates that funds can only be withdrawn with an appropriation or supplementary act, while paragraph 710 of the Financial Regulations bars overdrafts and requires any incurred interest to be refunded.

Mismanagement of Ways and Means Facility

The Federal Government alleged that the CBN mismanaged the Ways and Means facility by charging N2.73 trillion in interest and retaining it for its own use. This action, according to the government, contravenes financial regulations and exposes weaknesses in internal control processes.

The report stated:

“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.”

Auditor-General’s Recommendations

The Office of the Auditor-General recommended the following actions:

  1. Refund of N2.73 Trillion: The CBN must return the misappropriated funds to the CRF.
  2. Justification of Overdrafts: The Accountant-General of the Federation must provide evidence to justify the N17.1 trillion overdraft to the Public Accounts Committees of the National Assembly.
  3. Sanctions for Irregular Payments: Sanctions outlined in paragraph 3106 of the Financial Regulations should be enforced.

Risks to Public Finance

The audit report highlighted that unauthorized financing of expenditures and avoidable interest payments have created unnecessary fiscal burdens. The lack of proper documentation and approvals exposes the government to significant risks, undermining transparency and accountability in public finance management.

Conclusion

The allegations against the CBN underscore the urgent need for stronger internal controls and adherence to financial regulations in managing public funds. As the National Assembly deliberates on the Auditor-General’s findings, Nigerians await accountability and measures to prevent future irregularities.

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