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FG Could No Longer Pay Salary After Borrowing N14trn From CBN

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The Buhari administration has warned federal civil servants of hard times ahead of the new year. The government stated this on Wednesday after it said payment of salary has become difficult due to the shortfall in revenue accruing to the federal government.

The administration said it will not be able to pay the December salary for now due to paucity of funds, urging worker to save for the hard times ahead.

Dr Folasade Yemi-Esan who, in a circular dated November 25, 2021 said the civil servant must spend their November salary judiciously in order not to be stranded alongside their family members.

Titled: ”Envisaged Delay in Payment of December 2021 Salary- a Cautionary Advice”, the head of service said “it is noteworthy that while it is important to issue this advice, staff are here by assured that the centre is doing everything within its capability to forestall unnecessary delays.

“The contents of this circular should be treated with seriousness it deserves” the circular said.

The warming, however, comes on the back of preparation of the end of the year festivities, and may have come as a rude shock to the workers who are already expecting to use the December salary to celebrate the end of the year with their families and relations.

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If the federal government went ahead with this line of action, it may have equally joined the league of state governments such as Ondo state, Edo, Benue and others who are currently owing their workers months of salary arrears.

Recall that the Minister of Labour and Productivity Chris Ngige, had while responding to salaries owed Nigerian Doctors in September this year, revealed that the federal government has been borrowing from different sources, which include the World Bank, CBN and other development partners to pay salary of it workers.

Ngige said “I told them (resident doctors), no, when the budget office explained [that] we don’t have this cash, the borrowing agencies [like the] World Bank and the rest will give us this money through the CBN (Central Bank of Nigeria (CBN) in Dollars and we change it to give to you, to pay you and others that are involved because we are funding the budget through some deficits.

The magazine, based on available documents understands that the administration has been borrowing to fund both recurrent and capital expenditure of the budget since President Muhamamdu Buhari came to power in 2015. So far, the administration has borrowed more than N14 trillion from the apex bank in six years, according to checks from the Budget Nigerian Budget Office, NBO.

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Alarmed by the development, a global credit ratings agency, Fitch Ratings, had in January this year warned the federal government to stop repeated borrowing from the CBN through the Ways and Means window. The agency said the administration has abused the CBN borrowing.

Fitch said “the CBN’s guidelines limit the amount available to the government under its WMF to five per cent of the previous year’s fiscal revenues. However, the FGN’s new borrowing from the CBN has repeatedly exceeded that limit in recent years, and reached around 80 per cent of the FGN’s 2019 revenues in 2020”.

Also in February, the International Monetary Fund, IMF warned the federal government to quickly put and end to the Ways and means borrowing, adding that more efforts should be made to maximising other sources of revenue.

“The increasing reliance on CBN overdrafts has come with negative consequences. The financing is costly for the Federal Government at interest rates of MPR plus 300 basis points, and for the CBN, with sterilisation done through issuance of OMO bills,” IMF said.

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