The Senate yesterday approved the request of President Muhammadu Buhari to restructure the N22.7trn loans which the Central Bank of Nigeria extended to the federal…
The Senate yesterday approved the request of President Muhammadu Buhari to restructure the N22.7trn loans which the Central Bank of Nigeria extended to the federal government under its Ways and Means provision.
The money, which the government said was used to finance critical infrastructural projects, was spent without approval of the National Assembly.
Since the government started experiencing a significant shortfall in revenue, it has relied heavily on the CBN to finance its expenditure programmes via Ways and Means whose balance as of December 19, 2022 stood at N22.7trn.
The government had said it would repay the loan with securities such as treasury bills and bonds issuance.
Buhari had, last year, asked the Senate to approve his proposal to securitize the loan, but the lawmakers rejected the request, citing lack of details.
Buhari had said failure to grant the securitization approval would cost the government about N1.8trn additional interest in 2023.
The Senate approved the president’s request yesterday following the recommendation of its special committee set up to review the request and the submission made by finance ministry and the CBN.
It also approved the sum of N180.4bn as the balance of the supplementary budget and the interest accrued on the Ways and Means advances.
The committee’s chairman, Senator Ibrahim Gobir, N22.7trn advances were made to ensure the government did not shut down owing to revenue shortfalls.
He said the funds were spent on critical projects across the country.
He said, “Due to the serious short fall in government revenue, the Federal Government in order for the economy not to collapse, was compelled to borrow repeatedly from the CBN, exceeding the 5% threshold of the prior year’s revenue as stipulated by the CBN Act 2007.
He said part of the Ways and Means monies were given to state governments as loans to augment budgetary shortfall in their various states.
He said most of the request for funds for increase in Ways and Means were made to President Buhari by either the finance minister of the CBN governor.
Gobir, who is the Senate Leader, said the government had concluded plans to convert the CBN loans to tradeable securities such as treasury bills and bond issuance.
The Senate, however, urged the government to expedite action on the repayment of the loans through treasury bills and bond issuances.
It also advised the government to begin the process of recovering the portion of the Ways and Means given as the loans to state governments as further deferment of the repayment of the loans by the states would not be healthy for the economy.
It said if there was a need to exceed the 5 percent threshold of the prior year’s revenue, recourse must be made to the National Assembly for approval.
Senate President Ahmad Lawan, flayed the executive’s failure to carry the legislature along while accumulating the huge amount of loans.
He said the Senate had to pass the Ways and Means Advances to be able to pass the 2022 supplementary budget.
