The Senate has approved the request of President Muhammadu Buhari to restructure the N22.7 trillion loans the Central Bank of Nigeria (CBN) extended to the Federal Government under its Ways and Means provision.
The Ways and Means provision allows the Government to borrow from the Central Bank, short-term or emergency funds to finance. delayed government expected cash receipts of fiscal deficits.
The Federal Government had said that it would repay the loan with securities such as treasury bills and bonds issuance.
Government had been witnessing a significant shortfall in revenue, thereby, relying heavily on the central bank to finance its expenditure programmes through Ways and Means which balance as of December 19, 2022 stood at N22.7 trillion.
President Buhari had last year requested the Red Chamber to approve his proposal to securitize the loan, without actually attaching details, a development that made the lawmakers to reject the request.
While appealing to the Senate to reconsider its stand, Buhari said failure to grant approval to the request would cost the government about N1.8 trillion additional interest in 2023.
The Senate Leader, Ibrahim Gobir, who led the Senate in the debate for the approval of the Ways and Means, explained that part of the money were given as loans to states.
Gobir added that the Special Committee set up by the Red Chamber to scrutinize the fiscal document, put up the report after critical analysis and review of submissions made by the Federal Ministry of Finance, Budget and National Planning; and the Central Bank of Nigeria.
The Senate Leader said the panel discovered that the Ways and Means balance was initially N19,326,745,239,660.20 as of 30th June, 2022 but later grew to N22,719,704,774,306.90 as of 19th December, 2022 as a result of financial obligations to on-going capital projects and additional expenditures which includes 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 one trillion naira 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 said the House of Representatives had earlier approved the additional one trillion naira Ways and Means Advances requested by Mr. President Commander-In-Chief of the Armed Forces to enable the smooth implementation of the supplementary budget;
Gobir said the Senate Special Committee after exhaustive deliberations, recommended among others, the restructuring of N22, 719,703,774,306.90 for Ways and Means Advances be approved because the advances were made to ensure that the government does not shutdown;
The Committee also sought the approval of the Senate for the sum of N180,463,062,187 being the balance of the supplementary budget and the interest accrued on the Ways and Mean Advances.
Other recommendations were, “That if there Is a need to exceed the 5 per cent threshold of the prior year’s revenue, recourse must be made to the National Assembly for approval.
“That the Federal Government should 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 will not be healthy for the economy.
“That the Federal Government through the Ministry of Finance, Budger ang National Planning should expedite action on the repayment of the loans through treasury bilis and bond issuances.
“That the National Assembly will not condone future increase in the Ways and Means without seeking the approval of the National Assembly.”
The President of the Senate, Ahmad Lawan, while commenting after the approval of the fiscal document, noted that the Ways and Means Advances was a global practice.
He, however, faulted the process adopted by the executive arm of Government which failed to carry the National Assembly along while accumulating the huge amount of loans.
Lawan pointed out that the Senate had to pass the Ways and Means Advances so that the federal parliament would be able to consider and pass the 2022 Supplementary Budget still pending before the two chambers.
