Have you heard of WAYS AND MEANS FINANCING? Truly, there is serious fire on the mountain. Literally, “Ways and Means Financing” is CBN printing monies at alarming rate & borrowing same monies to the Federal Government. It is called credits to government. I’ll tell you more.
CBN website says it is N18 trillion. But it has gone up to about N20-N22 trillion in the last numbers. A guest on Arise TV said so much. I will try the best I can to summarize the whole drama going on.
So 10 years ago, APC politicized Fuel Subsidy when they occupied the streets of Lagos in the now infamous Ojota Protest against GEJ’s attempt to remove subsidy. Fast forward to 2022, Nigeria is “insolvent.” You maybe out of Recession, but your economy is in Stagflation.
The NNPC enjoy a solo or national monopoly on PMS importation. The model is not a market driven process. Fundamentally, Nigeria is riddled with Fiscal Deficit problems which is now a Macroeconomic Risk. Present-Nigeria is insolvent as a country. “You heard right.”
We all need to understand that Nigeria spent N11 trillion on Expenditures in 2021, but only generated N4 trillion Revenue. The deficit is close to N8 trillion. Apart from the N50 billion blown away to subsidy payments, Nigeria also accumulated deficit of about N30 trillion.
The meaning of this is, “for N100 Nigeria is spending, she is borrowing N60.” Clearly this is unsustainable. So Nigeria is insolvent by any standard of measurement. If you take the balance sheet of Nigeria to any bank, no one is going to borrow you any money.
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But because Nigeria is a “Sovereign,” she still has that credibility, so Buhari will continue to borrow. Nigeria’s Debt Profile is now at a N100 billion. N60 billion chunk of that is Domestic Debt, while N40 billion component of that is Foreign Debt.
The Finance Minister herself, said that Nigeria is using close to 95% of Revenues just on Debt Serving alone. Now this is why the Governors are complaining. Because the NNPC has not remitted a single Naira or kobo, into the Federation Account at FAAC, for the last 6 months.
Without this Federal Allocation, States are finding it extremely difficult to pay salaries. This is hitting the governors hard because some of them cannot even generate enough of IGR. And we know that most sitting governors in Nigeria are just lazy, dull & incompetent bunch.
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So present-Nigeria is riddled with lots of Structural Issues & this is where Peter Obi come in. “From Consumption to Production will save Nigeria in dire straits.” There are debts with the CBN by the “Ways and Means Financing.” It doesn’t end here, keep reading…….
When the government draws monies from “Ways and means Account,” it is equivalent to issuing a short-term bond straight to the Central bank. The Ways and Means Financing with the Central Bank has now crossed over N20 trillion.
Now add that to $100 billion Debt Stock, you’ll be looking at close to $150 billion in Total Debt Stock. So all your revenues is going to debt servicing. Where are the monies you are going to use to pay salaries? This is why Peter Obi said Nigeria is borrowing to pay salaries
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So it’s important we all vote for Peter Obi to rescue Nigeria, because even the (Ways and Means Financing), there is an issue as to whether it is violating the CBN Act. There is a threshold of the amount of money CBN can borrow to the FG.
Ways and Means Financing is supposed to be “temporal” & Nigeria is not supposed to use more than 5% of the Revenues from last year to provide Ways and Means Financing. Right now, Ways and Means Financing is close to 100%.
So FG & CBN clearly violated CBN Act. CBN needs to open its books & tell us precisely how much Ways and Means is. If u borrow from Ways and Means, u are supposed to pay it back the same year. It’s supposed to be a temporal overdraft, not FG’s permanent source of funding.
Nigeria’s GDP is $420. So Total Debt Stock of $150 billion is close to half of GDP. SCARY!! If you add the Ways and Means to Nigeria’s Debt Profile, Debt to GDP ratio should be more than the number being quoted by FG sources. Debt to GDP should be hovering around 40%.
Add to that, Nigeria is paying N800 per liter for diesel. Companies can’t afford that anymore. So they will transfer the cost to you. This explains the rising inflation in goods & services. So there are myriads of issues, gigantic as they are.
Nigeria is with many economic & security issues. They require someone whose heart & head is in the right place. Someone who is transparent like a glass as well. An incorruptible man, who won’t award & inflate contracts to his cronies & lackeys. Someone like Peter Obi.👏
Subsidy being an economic issue, should not be politicized. If Buhari who called subsidy a scam in 2015 was removing subsidy in bits since 2016, we would have achieved some sanity by now. The problem is that everything has to be market driven, which they are not!!
As long as we continue to subsidize, then we have a problem. The reality on the ground is; “insolvency” will kill Nigeria, for good!! Sri Lanka & Venezuela will be child’s play compared to where Nigeria will find itself. Am I making sense?
Nigeria had $18 billion in its Access Crude Account (ECA) for rainy days like this. Today, Buhari has emptied that account. Only Peter Obi understands the Structural Reforms & Fiscal Challenges we have on ground. He is clearly ahead of the game. Vote for Peter & save Nigeria.
Peter Obi will put Nigeria on the path to growth once more. He will achieve a GDP Growth Rate of 6-7%, which we will give Nigeria $1 trillion GDP potential in 8 years. With this GDP growth, 100 million Nigerians will be pulled out poverty. YES!
FDI has dwindled drastically, so Nigeria relies on Diaspora Remittances for its Forex sustenance. Peter Obi will put the right Forex Policies in place, & pick the right CBN Governor to save the Naira. God bless Nigeria & bless all of us as well.