The House of Representatives yesterday approved the request by President Muhammadu Buhari to convert about N23.72 trillion “ways and means” loan from the Central Bank of Nigeria (CBN).
Ways and Means provision allows the government to borrow from the CBN a short-term or emergency finance to fund delayed expected cash receipts of fiscal deficits.
The President last year asked both chambers of the National Assembly to approve the conversion, saying it would be repaid through securities such as treasury bills and bonds issuance.
The Debt Management Office (DMO) already put Nigeria’s total debt stock at N44.6 trillion as of the third quarter of 2022.
The Senate had on Wednesday endorsed the securitisation of the CBN loans, which it had earlier rejected for lack of details, and the House toed a similar line yesterday.
Recall that in February the lower chamber had given partial approval.
The House approved the request following the consideration of the report by its Committees on Finance, Banking and Currency and Aids, Loans and Debt Management.
The report read by James Faleke of the Committee of Supply, urged members to: “approve the requested additional N1 trillion Ways and Means advances for the implementation of the 2022 Supplementary Appropriation Act as passed by the National Assembly.
“Approve the securitisation of the total outstanding Ways and Means amount under the following terms: amount, N23,719,703,774,306.90; tenor 40 years; moratorium on principal repayment three years; pricing/interest rate 9% per annum.”
The Committee of Supply, chaired by Deputy Speaker Idris Wase, considered the recommendation in the report and approved it.
Due to the serious shortfall in government revenue, the federal government in order for the economy not to collapse, was compelled to borrow repeatedly from the CBN, exceeding the five per cent threshold of the prior year’s revenue as stipulated by the CBN Act, 2007.
Before endorsing the proposal on Wednesday, Senate Leader, Ibrahim Gobir, said the Special Committee set up to scrutinise 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 upper chamber also authorized an additional N180.4 billion being the balance of the supplementary budget and the interest accrued on the ways and means advances.
Gobir had argued that the N22.7 trillion advances were made to ensure the government does not shut down due to revenue shortfalls, adding the monies were used for funding critical projects across the country.
After extensive explanation, he noted that the House of Representatives also, had earlier approved additional N1 trillion ways and means advances requested by Buhari to enable the smooth implementation of the supplementary budget.
“Part of the ways and means monies were given to state governments as loans to augment budgetary shortfall in their various states,” he said. .
He also explained that “due to the serious shortfall in government revenue, the federal government in order for the economy not to collapse, was compelled to borrow repeatedly from the CBN, exceeding the five per cent threshold of the prior year’s revenue as stipulated by the CBN Act, 2007.”
