The Nigerian Senate has approved the federal government’s request to restructure N22. 7 trillion borrowed from the Central Bank of Nigeria, CBN.
The Buhari administration borrowed the funds from the apex bank through the Ways and Means, W&M window as provided in the CBN Act, to fund budget deficits.
The only snag, according to experts is that the administration violated the Act which specifies that advances from the CBN must not exceed five percent of the annual Budget. The Act also stipulates that such advances must be repaid within the budgetary year.
Obviously, none of these has been done and not a few insist that the National Assembly should have raised questions with the FG on why the violation happened by way of its oversight function as provided in the constitution.
“It is ridiculous and creates room for suspicion. We don’t think this is necessary, especially on the eve of this administration’s departure. This leaves us with the question of whether governance is a continuous exercise or not,” Secretary General, Trade Union Congress, TUC, Nuhu Toro, said:
But justifying the Senate approval on Wednesday, Senate Leader Ibrahim Gobir, disclosed that a huge part of the loan was given to state governments as loans.
Gobir also stated that the approval was done after the recommendation by a committee set up by the senate received submissions from the Ministry of Finance and Budge and the Central Bank of Nigeria, CBN
Giving a breakdown, the Senate Leader said the panel discovered that the Ways and Means balance was initially N19,326,745,239,660.20 as of June 30, 2022, but later grew to N22,719,704,774,306.90 as of 19th December 19, 2022, as a result of financial obligations to on-going capital projects and additional expenditures which include domestic debt service gaps and interest rate.
He said the Senate on Wednesday, 28th December 2022, approved the sum of N819, 536,937,813 from the N1 trillion additional request made by Mr. President, Commander-In-Chief of the Armed Forces leaving an outstanding balance of N180, 463,062,187 being the accrued interest on the sum;
He explained that the House of Representatives had earlier approved the additional N1 trillion Ways and Means advances requested by the president to enable the smooth implementation of the supplementary budget.
According to him, “Part of the Ways and Means monies were given to state governments as loans to augment budgetary shortfall in their various States. Most of the requests for funds for an increase in Ways and Means were made to Mr. President on the need to finance the budget due to revenue shortfall. Such requests were either made by the Hon. Minister of Finance, Budget, and National Planning or the Central Bank Governor.
“The federal government as a result of revenue shortfalls, occasioned by the COVID-19 pandemic and low oil prices, relied heavily on the Ways and Means to finance its budget deficit to keep the country working for the people,” he said, adding that the monies received by the federal government were actually used in the funding of critical projects across the country.
Gobir, said the federal government had to borrow the funds to support its spending as a result of a shortfall in government revenue, which could have led to the collapse of the economy.
“That the federal government through the Ministry of Finance, Budget, and National Planning has concluded plans to convert the CBN loans to tradeable securities such as treasury bills and bond issuance,” the Senate Leader said.
