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SERAP writes Buhari on $25bn loan acquired through CBN overdraft

By News Desk

The Socio-Economic Rights and Accountability Project (SERAP) has urged President Muhammadu Buhari to provide spending details of the overdrafts and loans obtained from the Central Bank of Nigeria (CBN) by the Federal Government since 2015.

It requested that the details should include the total overdrafts, the projects on which the overdrafts have been spent; repayment of all overdrafts to date, as well as to clarify whether the $25bn (N9.7trn) overdraft reportedly obtained from the CBN is within the five-percent limit of the actual revenue of the government for 2020.

SERAP Deputy Director, Kolawole Oluwadare, also urged the president to provide details of spending of overdrafts and loans obtained from the CBN by successive governments between 1999 and 2015.

Through a Freedom of Information request dated 6 March, Oluwadare said that the move was aimed at ensuring transparency and accountability in the spending of CBN overdrafts and loans .

According to him, the move would promote prudence in debt management, reduce risks of corruption and mismanagement, and help the government to avoid the pitfalls of excessive debt.

“Disclosing details of CBN overdrafts and repayments would enable Nigerians to hold the government to account for its fiscal management and ensure that public funds are not diverted, thereby improving the ability of your government to effectively respond to the COVID-19 crisis. This means that the government would not have to choose between saving lives or making debt payments.

“The increasing level of public debt would threaten the ability of the government to invest in essential public goods and services, such as quality education, healthcare, and clean water. It is the primary responsibility of the government to ensure public access to these services in order to lift millions of Nigerians out of poverty and to achieve the Sustainable Development Goals by 2030.”

“The growing level of public debt would increase debt-servicing costs, which would mean that your government has less resources to spend on these critical public services.”

“SERAP is concerned about the growing level of debts by the Federal Government, and the apparent lack of transparency and accountability in the spending of overdrafts and loans so far obtained from the CBN, as well as the repayments to date.”

“Also, the recent overdraft of $25.6bn (about N9.7trn) obtained from the CBN would appear to be above the five-percent limit of the actual revenue of the Federal Government for 2020, that is, N3.9trn, prescribed by Section 38(2) of the CBN Act 2007. SERAP notes that five-percent of N3.9trn is N197bn.”

“While section 38(1) of the CBN Act allows the Bank to grant overdrafts to the Federal Government to address any temporary deficiency of budget revenue, sub-section 2 provides that any outstanding overdraft ‘shall not exceed five-percent of the previous year’s actual revenue of the Federal Government.’ Similarly, Section 38(3) requires all overdrafts to ‘be repaid as soon as possible and by the end of the financial year in which the overdrafts are granted.’”

“The CBN is prohibited from granting any further overdrafts until all outstanding overdrafts have been fully repaid. Under the CBN Act, ‘no repayment shall take the form of a promising note or such other promise to pay at a future date, treasury bills, bonds or other forms of security which is required to be underwritten by the Bank.’”

The letter is copied to Mr Abukabar Malami, SAN, Attorney General of the Federation and Minister of Justice; Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning; Godwin Emefiele, the Governor of CBN; and Ms Patience Oniha, Director-General of the Debt Management Office.

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