The Central Bank of Nigeria (CBN) has debunked its former Governor and now Emir of Kano, Muhammadu Sanusi’s II claim that the Federal Government, under the President Muhammadu Buhari’s administration had overdrawn on its account with the apex Bank to the tune of N4.7 trillion.
The CBN, backing its claim with data, insisted that government still had a net balance of over N1.19 trillion in its Treasury Single Account (TSA) and declared Sanusi’s claims as “totally false and wholly fabricated.”
TSA is a financial policy introduced by the federal government in 2012, to consolidate all inflows from the country’s ministries, departments and agencies (MDAs) by way of deposit into commercial banks, traceable into a single account at the CBN
Quoting Section 38.2 of the CBN Act 2007, Sanusi had maintained that the Central Bank, a lender of last resort, had exceeded its lending limit to the government, a development he noted had weakened the credit worthiness of the country by the international community.
Speaking at a policy monitoring dialogue hosted by Savannah Centre for Diplomacy, Democracy and Development, in Abuja last week, Sanusi had said the CBN’s lending to the government since Buhari came in had spiked from about N1.5 trillion to over N4.5 trillion.
Sanusi also said: “The CBN-FGN relationship is no longer independent. In fact, one could argue their relationship has become unhealthy. CBN claims on the FGN now top N4.7 trillion equal to almost 50% of the FGN’s total domestic debt. This is a clear violation of the Central Bank Act of 2007 (Section 38.2), which caps advances to the FGN at 5% of last year’s revenues. Has CBN become the government’s lender of last or first resort?”
In his opinion, no one was willing to lend to the Nigerian government, noting, “If the Senate approved, I want to see who will lend you $30 billion when you have five exchange rates.”
But in defence of its transaction with the government, the CBN said in a statement that “Contrary to his claims, the Federal Government’s Treasury Single Account (TSA) balance with the CBN as of 2nd December 2016 was N2.66 trillion (credit). In line with practices that even Emir Sanusi presided over, the FG has overdrawn another account at the CBN by about N1.47 trillion (debit) as of 2nd December 2016.
“In effect, therefore, the net balance of the FG at the CBN is over N1.19 trillion (credit), as shown in Table.
Despite the Emir’s seeming knowledge of these situations, the CBN wondered how “could Sanusi have reached the conclusion that the CBN’s claims on the FG are over N4.7 trillion? Where did he get this number?”
But Sanusi had argued that “the problem of the current government is not having the right policies to fix the current economic woes,” adding that the country is enmeshed in heavy debts, as out of every N1 Nigeria makes, 40 kobo goes to debt and 60 kobo is left for salaries, health, education, power, infrastructure.
He had argued that oil revenue is merely a working capital that cannot make the country rich, noting that while Nigeria produces one barrel for 80 Nigerians; Saudi Arabia produces one for three Saudis.
Besides, he noted that in every economic growth is driven by “consumption, investment and net export”, adding that “our exports cannot grow, without regulatory certainty or an increase in the price of oil.”
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