A bill seeking to raise ways and means cash advances to the federal government by the Central Bank of Nigeria (CBN) from five percent to 10 percent has passed the second reading at the senate.
The bill provides that cash advances should not exceed 10 percent of average government actual revenues during the preceding three years.
The legislation scaled the second reading on Tuesday after Adetokunbo Abiru, chairman of the senate committee on banking, led a debate on it.
The existing law provides that the advance by the apex bank must not exceed five percent of the previous year’s revenue of the federal government.
Many Nigerians believe that the alleged abuse of the ways and means by the CBN in the past eight years is one of the reasons the country has been logging a steady increase in inflation in recent months.
While leading the debate on the bill, Abiru said the loans should be repaid in full within three months from the date it is made available.
“In order to firm up this provision and prevent a repeat of the recent experience in which the Bank’s Ways and Means have fueled inflation and significantly distorted economic management, the bill proposes the following; any such direct advance to the government should not exceed 10% of average government actual revenues during the preceding three years,” he said.
“For the purpose of determining the government’s actual government revenue, proceeds from asset sales shall be excluded to avoid capturing revenues from exceptional items.
“Such temporary loans should be repaid in full within three months from the date it is made available. This is consistent with global practice.”
The Lagos senator said the bill proposes the establishment of the office of a chief compliance officer for the CBN of the rank of a deputy governor.
“This role does not conflict with the functions of the Compliance Unit of the Bank which is more concerned with regulated entities in the financial sector,” he said.
Abiru said the bill proposes that the apex bank must give a year’s notice before it can change or redesign the naira. (The Cable)
