A senior special assistant to the president on public affairs, Aliyu Audu, has said that the ways and means declared to have been cleared by President Bola Tinubu had not necessarily been cleared in all intent and purposes.
President Tinubu, in his Independent Day speech on Tuesday, October 1, said his administration had cleared the about N30 trillion debt the government owed to the Central Bank of Nigeria (CBN).
The federal government uses the instrumentality of ways and means to access funds from the apex bank to address funding gaps.
Tinubu said, “We have cleared the ways and means of a debt of over N30 trillion. We have reduced the debt service ratio from 97 per cent to 68 per cent.
“Despite all these, we have managed to keep our foreign reserve at $37 billion. We continue to meet all our obligations and pay our bills.”
However, speaking on Channels TV programme on Wednesday, October 2, Audu said the president’s declaration on ways and means does not necessarily mean the debt has been cleared.
According to Audu’s explanation, the ways and means are a burden on CBN and securitising it was a way of bringing transparency to how the apex bank interacts with the federal government.
He recounted that the federal government raised about N4.5 trillion from the stock market through FGN bonds, treasury bills and CBN special bills with the aim to securitise the ways and means debt.
“It does not necessarily mean they (ways and means) have been paid off as debt. They have been converted as debt and been given a long time repayment period through bonds that were issued and oversubscribed at the time,” Audu said.
He explained further that the CBN would be in a better position to give details and implement other monetary policy to ensure that the burden of the ways and means is not staring right on its face.
“I think the detail of the clearance of the ways and means usually comes from the CBN.
“What the president means is that the weight which these ways and means post to the CBN that burden has been taken off,” Audu maintained.
He stressed that the ways and means that have been converted to debts, and those debts were going to be paid over time, and that nobody was saying the debt has been paid.
“The burden the ways and means pose to the CBN and not allowing it to do what it ought to do as the controller of the economy has been taken off in such a way that our debt service ratio has been reducing from 97 per cent to 68 per cent, he asserted.
“That is what the president referred to yesterday and not to mislead anyone that this has been paid off,” Audu said.
However, many Nigerians are concerned about the declaration by the president that the N30 trillion ways and means debt it owned to the CBN has been cleared.
They are curious to be told where the government got the funds it deployed in paying off the ways and means amid over N121 trillion public debt portfolio and about $774 million loan the Tinubu-led administration had borrowed from the World Bank.
A research economist, Gospel Obele, does not completely agree that the ways and means have been cleared by the government.
He believes that the debt-to-GDP (gross domestic product) ratio, viewed in the context of the living standards of Nigerians does not translate to improved state of the economy.
This is because metrics or indicators like that do not have a transferrable impact on the average Nigerian as the country has not developed means through which the impact will flow to an average Nigerian, he explained.
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“These are deeper conversations beyond just the Presidential announcement. In terms of the authenticity of the statement, it is authentic on the ground of how the government in the world today talk about economic indicators, but it is not authentic enough on how individuals and the state of the economy right now are being played out,” Obele maintained.
The ICIR can report that last December, the Senate approved the securitisation of N7.3 trillion ways and means in the Consolidated Revenue Fund when President Tinubu sought to relieve.
In March this year, it set up an ad-hoc committee to probe the N30 trillion ways and means loans. However, the findings of the committee have yet to be revealed to Nigerians.