{"id":35480,"date":"2021-01-21T20:03:29","date_gmt":"2021-01-21T20:03:29","guid":{"rendered":"https:\/\/www.africa-press.net\/nigeria\/?p=35480"},"modified":"2021-01-21T16:56:42","modified_gmt":"2021-01-21T16:56:42","slug":"fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn","title":{"rendered":"Fitch raises the alarm on Nigerian government borrowing from CBN"},"content":{"rendered":"

Africa-Press<\/a> – Nigeria<\/a>. <\/strong><\/span>Fitch, a credit ratings agency, has sounded the alarm over Federal Government\u2019s reliance on Central Bank of Nigeria(CBN) for loans through Ways and Means facility, to cover up the shortfall in revenue.<\/p>\n

Fitch Ratings stated this in its report on Wednesday titled \u2018Nigeria\u2019s deficit monetization may raise macro-stability risks\u2019.<\/p>\n

Ways and Means financing is basically the printing of money by the CBN to enable the FG to plug its budget deficit.<\/p>\n

\u201cSustained use of direct monetary financing could raise risks to macroeconomic stability \u2013 given the current weak institutional safeguards \u2013 but we expect the FGN to reduce its use of the facility in 2021,\u201d the report reads.<\/p>\n

The FGN directly borrowed 1.9 percent of GDP from the CBN to fund its fiscal deficit in 2020, estimated by Fitch at 3.6 percent of Gross Domestic Product.<\/p>\n

While it says it understands the need for the Federal Government to look for ways to finance the budget against a background of the coronavirus pandemic, Fitch said, the use of central bank financing in Nigeria predates the pandemic shock.\u201d<\/p>\n

The report added, \u201cWe estimate that the balance of the government\u2019s WMF with the CBN was around N9.8tn (6.7 percent of GDP) at end-2019, up from N5.4tn (4.2 percent of GDP) at end-2018.<\/p>\n

\u201cUnlike the government, we include this balance in our metrics for Nigeria\u2019s government debt. Borrowing from the facility accounted for 30 percent of the FGN\u2019s debt at end-2019, on our estimates.\u201d<\/p>\n

Fitch Rating stated that repeated central bank financing of government budgets could raise risks to macro-stability in the context of weak institutional safeguards that preserve the credibility of policymaking and the ability of the central bank to control inflation.<\/p>\n

The credit rating agency, however, provided a positive outlook for the Nigerian government\u2019s fiscal revenue and expenditure projections for 2021 describing it as broadly realistic, saying \u201cwe believe it should preclude further significant borrowing by the FG from the CBN facility this year.\u201d<\/p>\n

Opinions<\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Nigeria. Fitch, a credit ratings agency, has sounded the alarm over Federal Government\u2019s reliance on Central Bank of Nigeria(CBN) for loans through Ways and Means facility, to cover up the shortfall in revenue. Fitch Ratings stated this in its report on Wednesday titled \u2018Nigeria\u2019s deficit monetization may raise macro-stability risks\u2019. Ways and Means […]<\/p>\n","protected":false},"author":84,"featured_media":35479,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,15,28,26],"tags":[1570,2140,503,2586,2584,2585,254,822],"class_list":["post-35480","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-homepage-english","category-twitter","tag-africa-press","tag-africa-press-nigeria-2","tag-cbn","tag-credit-ratings","tag-fitch-rating","tag-fitch-ratings","tag-nigeria","tag-nigerian-government"],"yoast_head":"\nFitch raises the alarm on Nigerian government borrowing from CBN - Nigeria<\/title>\n<meta name=\"description\" content=\"Fitch, a credit ratings agency, has sounded the alarm over Federal Government\u2019s reliance on Central Bank of Nigeria(CBN) ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fitch raises the alarm on Nigerian government borrowing from CBN\" \/>\n<meta property=\"og:description\" content=\"Fitch, a credit ratings agency, has sounded the alarm over Federal Government\u2019s reliance on Central Bank of Nigeria(CBN) ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn\" \/>\n<meta property=\"og:site_name\" content=\"Nigeria\" \/>\n<meta property=\"article:published_time\" content=\"2021-01-21T20:03:29+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/nigeria\/sites\/3\/2021\/01\/img-6009b22a32d69.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"387\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/nigeria\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Fitch raises the alarm on Nigerian government borrowing from CBN\",\"datePublished\":\"2021-01-21T20:03:29+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn\"},\"wordCount\":335,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/nigeria\/sites\/3\/2021\/01\/img-6009b22a32d69.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Nigeria\",\"CBN\",\"credit ratings\",\"Fitch rating\",\"Fitch Ratings\",\"Nigeria\",\"Nigerian government\"],\"articleSection\":[\"all news\",\"Economy\",\"homepage-english\",\"twitter\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn\",\"url\":\"https:\/\/www.africa-press.net\/nigeria\/economy\/fitch-raises-the-alarm-on-nigerian-government-borrowing-from-cbn\",\"name\":\"Fitch raises the alarm on Nigerian government borrowing from CBN - 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