President Muhammadu Buhari’s continued reliance on Nigeria’s Central Bank to fund the country’s budget deficit may pose severe economic consequences, Fitch Ratings said in a report Wednesday.

The American credit rating agency disclosed that the Buhari administration directly borrowed 1.9 percent out of an estimated 3.7 percent GDP from the Nigerian government banker to fund deficits in the 2020 fiscal plan.

The report expressed fears that sustained use of direct monetary financing could raise risks to macroeconomic stability – given the current weak institutional safeguards.

It, however, expects the Nigerian government to reduce its leanings to its overdraft account with the CBN, which enables cash advances from the bank to the government, in 2021.

Fitch noted that although many emerging economies had leaned towards financing budgetary deficits through their central banks, in light of the economic disruptions occasioned by the coronavirus pandemic, Nigeria’s recourse to the CBN predates the pandemic.

“We estimate that the balance of the government’s Ways and Means facility with the CBN was around N9.8tn (6.7 percent of GDP) at end-2019, up from N5.4tn (4.2 percent of GDP) at end-2018,” it said, while stating that “borrowing from the facility accounted for 30 percent of the Nigerian government’s debt at end-2019, on our estimates.”

The report added that even though the CBN’s regulations restrict the amount available to the government under its so-called ways and means facility to five percent of the previous year’s fiscal revenues, borrowings from the apex bank by the Buhari administration has, nonetheless, continually exceeded the cap, reaching around 80 percent of Nigeria’s 2019 revenues in 2020.

The Fitch report was silent on Nigeria’s tax receipts, as citizens make demands for the Buhari-led federal government to render accounts for its usage of the country’s humongous tax revenues.

The frontline rating agency, however, said it expected Mr. Buhari to soft pedal on the dangerous policies in implementation of the 2021 budget.

Presidential spokesman Garba Shehu told Peoples Gazette that all enquiries on the Fitch’s findings should be directed to the CBN, whose governor and spokesman did not return requests for comments Thursday afternoon.