Report Summary
Nigeria’s widening gap between revenue and spending pushed the government to borrow more and, when other sources fell short, turn to CBN financing through Ways and Means. The balance ballooned from ₦856.3 billion in 2015 to ₦23.5 trillion by 2022, driven by falling oil revenue, fiscal deficits, COVID-19 and rising subsidy costs.
In 2023, the Tinubu administration securitised the accumulated balance, cutting Ways and Means to ₦8.2 trillion. But the debt did not disappear; it simply changed its address and moved into official public debt.
The effects went beyond government accounts. More naira added liquidity and inflationary pressure, while the naira weakened sharply. Still, Ways and Means was not the whole story; FX reforms, oil earnings, dollar shortages, capital flows and CBN intervention also mattered.
Overall, the experience shows that fiscal deficits cannot be sustainably financed by creating more money. Stronger revenue, better spending and disciplined borrowing remain essential.
What Is Ways and Means?
Ways and Means is essentially a short-term loan from the CBN to the government when available revenue and other funding sources are not enough to cover the fiscal deficit over a given period. It provides temporary funding to help the government meet its obligations when there is a financing gap. The idea is simple: borrow, when necessary, repay quickly, and move on, not turn temporary financing into a permanent source of funding.
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