The Nigerian Senate on Wednesday, 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 apex bank if it needs short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.
Since the government started experiencing a significant shortfall in revenue, it has relied heavily on the central bank to finance its expenditure programmes via Ways and Means which balance as of December 19, 2022 stood at N22.7 trillion.
The Federal Government had said it will repay the loan with securities such as treasury bills and bonds issuance.
President Buhari had last year asked the Senate to approve his proposal to securitise the loan but the Red Chamber rejected the request, citing lack of details.
And, while appealing to the Senate to reconsider its stand, President Buhari said failure to grant the securitisation approval will however cost the government about N1.8 trillion in additional interest in 2023.
The Senate Leader, Ibrahim Gobir, who led the Senate in the debate for the approval of the Ways and Means on Wednesday, explained that part of the money were given as loans to states.
Senator Gobir added that the Special Committee set up by the senate 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.
Budgetary Shortfalls
According to him, “Part of the Ways and Means monies were given to State Governments as loans to augment budgetary short fall in their various States;
The senate Leader said the Senate Special Committee after exhaustive deliberations, recommended 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 panel further 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.”
Senate President, Ahmad Lawan, 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.
Senator Lawan added 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.
