The immediate past Director- General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, has expressed concern over excess borrowing by the Federal Government in the midst of dwindling revenue. He observed that a large portion of the domestic borrowing was through ways and means which has serious implications for inflation. Ways and means is a mechanism for the government to borrow from the Central Bank under specified credit policy which, most times, entails printing money.
Yusuf said this at the Bi-Monthly Forum of the Finance Correspondents Association of Nigeria (FICAN) held at its national secretariat in Lagos on Thursday, as part of its capacity building programme. Speaking on the topic “Nigerian economy in first half 2021 & outlook for the financial services sector”, Yusuf said that the borrowing spree of the Federal Government was hurting the economy as it escalates the already high rate of inflation in the country.
He disclosed that the facility usually comes at a huge cost to the taxpayer as the government paid N480 billion interest on the N1.8 trillion facility granted to it through the ways and means window between January and May. He expressed concern that government’s excess borrowing has put pressure on the apex bank to exceed the “five per cent ceiling of actual government revenue for the preceding year”, specified in the CBN Act.