Nigerian Senate has extended the implementation period of the 2022 supplementary Appropriation Act from June 30 to December 31, 2023.
The extension was done at an emergency plenary where the Senate also considered the Central Bank of Nigeria Act to amend certain provisions seeking to expand the Nigerian government’s borrowing limit.
Senate’s amendment of the Central Bank of Nigeria (CBN) Act was to raise the total advances the bank can make to the government from 5% to 15%
The two bills, which were both read for the first time, were also read for a second time before they were eventually read a third time and passed on the same Saturday.
The Supplementary Appropriation Act which was to expire in June contains about Twenty-Three trillion Naira advance by the Nigerian government to the CBN and tagged, “ways and means” expenditure.
The CBN, under its Ways and Means Advances, had extended about N22.7 trillion in loans to the Nigerian government as of December 19, 2022.
It is also worthy of note, that the entire sum involved was not loaned to the Nigerian government in one year but rather it is an accumulation of the amount given to it in the last seven years (2016-2023).
Moreso, the Ways and Means provision allow 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.
However, the total sum advanced to the government by the CBN seems to be in contrast with the Law establishing the CBN Act.
According to the Act, “the CBN may grant temporary advances to the Nigerian government in respect of temporary deficit of budget revenue at such rate as the bank may determine.”
It, however, says the total amount of such advances outstanding “shall not at any time exceed five (5) percent of the previous year’s actual revenue of the Federal Government.”
In addition, it stipulates that “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”
It is based on the contrast that the Senate held an emergency session to ensure that the actions of Nigerian government aligned with the CBN Act.
Mercy Chukwudiebere
