Turning the Corner: A New Compact between Nigeria's People and State
...KEEPING FINANCING NEEDS ELEVATED, RAISING RISKS OF
CONTINUED FINANCING FROM WAYS AND MEANS
•
In recent years, Nigeria has filled financing
gaps through contracting Ways and Means
financing from CBN.
Fiscal deficit and CBN W&M
8,000
6,000
This large-scale use of W&M contravened the
CBN Act. Such deficit monetization is
distortionary and inflationary.
4,000
2,000
Naira billions
0
-2,000
Up until May 2023, Nigeria had accumulated
N26.9 trillion (or 11.6 percent of GDP) in Ways
and Means financing.
In June 2023, N22.7 billion of the stock was
securitized allowing it to be considered official
debt, reducing the interest rate, and increasing
the tenor.
Nigeria's return to macroeconomic stability
hinges in part on decisively ending the reliance
on W&M from CBN.
-4,000
-6,000
-8,000
-10,000
-12,000
-14,000
2016 2017 2018 2019 2020 2021 2022 2023P 2024P
Estimated federal fiscal balance outturn
■Budgeted federal fiscal balance
NIGERIA
THE WORLD BANK
IBRD ⚫IDA | WORLD BANK GROUP
■Change in Ways and Means financing
Source: OAGF, DMO, WB
19View entire presentation