Nigerian lawmakers have finally approved the restructuring of N22.719 trillion borrowed by the Federal Government from the Central Bank of Nigeria (CBN) through its Ways and Means provision.
This approval was initiated after the Senate considered the report from its ad hoc committee, which explained how the Nigerian Government had repeatedly borrowed from the CBN in the process exceeding the five percent threshold of the previous year’s revenue as stipulated by the CBN Act.
Buhari had last year asked the Senate to approve his proposal to securitize the loan but the Red Chamber rejected the request, citing a lack of details.
Buhari, while appealing to the Senate to reconsider its stand, said failure to grant the securitization approval will cost the government about N1.8tn in additional interest in 2023.
Presenting the report, the senate leader, Ibrahim Gobir, said: “Part of the Ways and Means monies were given to State Governments as loans to augment budgetary shortfall in their various States.
Mr. President received the majority of the funding requests for an increase in Ways and Means related to the need to finance the budget because of a revenue shortfall. These demands were either made by the Central Bank Governor or the Honorable Minister of Finance, Budget, and National Planning.
Due to income deficits brought on by the COVID-19 epidemic and low oil prices, the Federal Government largely relied on the Ways and Means to finance its budget deficit to keep the nation operating for the benefit of its citizens.
The Federal Government used the funds it received to finance important national initiatives.
The Federal Government was forced to continually borrow money from the CBN to keep the economy from collapsing due to the severe shortfall in government revenue, exceeding the CBN Act of 2007’s 5 percent revenue threshold.
It has finalized preparations to convert CBN loans into tradable securities like treasury bills and bond issuance through the Ministry of Finance, Budget, and National Planning.
