In the fiscal year ending on December 31, 2022, the Central Bank of Nigeria (CBN) extended a loan of N23.18 trillion to the Federal Government, utilizing its ‘Ways and Means’ policy.
However, this loan surpassed the stipulated limit by a substantial N22.9 trillion, as disclosed in the recently published financial report of the Bank.
The financial statements of both the Group and the Bank for the year revealed profits of N103.854 billion and N65.626 billion, respectively, in contrast to the previous year’s figures of N75.125 billion and N31.044 billion.
These financial statements, based on accounting principles drawn from the International Financial Reporting Standards (IFRS) and the guidelines issued by the Financial Reporting Council of Nigeria (FRCN), were prepared in accordance with the Central Bank of Nigeria Act and the Financial Reporting Council of Nigeria Act.
CBN ‘Ways and Means Loan to Federal Government Exceed Statutory Limit by N22.9trillion
According to Central Bank of Nigeria just released financial report, total loan advanced to the Federal Government under its ‘Ways and Means’ policy in the year ending December 31, 2022 rose to a whopping N23.18 trillion, exceeding its statutorily allowed limit by N22.9 trillion.
The Group and Bank’s profits for the year were N103.854 billion and N65.626 billion respectively (2021: N75.125 billion and N31.044 billion respectively).
The consolidated and separate financial statements of the Central Bank of Nigeria (‘the Group’) for the year ended December 31, 2022 were prepared based on accounting policies which are derived from the IFRS Standards, the recommended practices in the guidelines issued by the Financial Reporting Council of Nigeria (FRCN) titled “Accounting Guideline for Financial Reporting by Central Bank of Nigeria” (“the Guideline”) in February 2018, revised annually for reporting period up to December 31, 2022, the relevant provisions of the Central Bank of Nigeria Act No. 7, 2007 and the Financial Reporting Council of Nigeria Act No. 6, 2011.
CBN net income will be allocated to retained earnings
In accordance with the Fiscal Responsibility Act of 2011, a portion of the Bank’s net income, specifically 20 percent, will be allocated to retained earnings, while the remaining balance will be remitted to the Federal Government.
The report highlighted a temporary advance balance of N23.18 trillion, which represents an overdraft facility granted by the CBN to the Federal Government.
This temporary advance aligns with Section 38 of the CBN Act, which imposes a limit of 5 percent of the previous year’s actual Federal Government revenue on such advances.
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A significant development arose with the appointment of Jim Obazee, former CEO of the Financial Reporting Council, as a special investigator to examine the affairs of the Central Bank of Nigeria and its affiliated entities. This action follows the release of the CBN’s financial report.
The board of directors emphasized that the financial statements for both the Group and the Bank were meticulously prepared in adherence to various regulatory frameworks and standards, including IFRS and FRCN guidelines.
The Financial Reporting Council, having received the report, will conduct a thorough review, especially given the CBN’s status as a public interest entity under its purview.
Instances of non-compliance with accounting standards or corporate disclosures will warrant inspection meetings with the CBN to provide clarifications or rectify any issues.
Serious non-compliance matters may lead to withdrawal and reissuance of the statements. Detailed guidelines for this process can be accessed on the FRC’s website.
The board of directors in their report said, “We present the state of affairs of the Group and the Bank as at December 31, 2022, the results and cash flows of the Group and the Bank in accordance with the accounting policies set out on pages 18 to 49 which are derived from the IFRS Standards as issued by the International Accounting Standards Board (IFRS Standards), the recommended practices in the guidelines issued February 2018, revised annually for reporting period up to 31 December 2022 by the Financial Reporting Council of Nigeria (FRC), titled “Accounting Guideline for Financial Reporting by Central Bank of Nigeria” (the Guideline) as it affects Central Bank of Nigeria operations, the CBN Act of 2007 and the Financial Reporting Council of Nigeria Act No. 6 of 2011.
“The consolidated and separate financial statements of the Central Bank of Nigeria (‘the Group’) for the year ended 31 December 2022 were prepared based on accounting policies set out on pages 18 to 49 which are derived from the IFRS Standards, the recommended practices in the guidelines issued by the Financial Reporting Council of Nigeria (FRCN) titled “Accounting Guideline for Financial Reporting by Central Bank of Nigeria” (“the Guideline”) in February 2018 , revised annually for reporting period up to 31 December 2022, the relevant provisions of the Central Bank of Nigeria Act No. 7, 2007 and the Financial Reporting Council of Nigeria Act No. 6, 2011″.
The CBN is a public interest entity as defined by Section 77 of FRC Act and therefore is under Financial Reporting Council purview.
