Mohammed Shosanya
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 .
President Buhari had last year asked the Senate to approve his proposal to securitize the loan, which was, however rejected by the upper chamber on the excuse that there was lack of details on government’ expenditures.
He later implored the Senate to reconsider its stand,saying failure to grant the securitization approval will however cost the government about N1.8 trillion in additional interest in 2023, adding that Federal Government would repay the loan with securities such as treasury bills and bonds issuance.
The Senate Leader, Ibrahim Gobir,who led the debate for the approval of the Ways and Means during plenary,explained that part of the money was given as loans to states.
He disclosed 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.
According to him,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 House of Representatives had earlier approved the additional one trillion naira Ways and Means Advances requested by Mr. President CommanderIn-Chief of the Armed Forces to enable the smooth implementation of the supplementary budget.
He added:”Part of the Ways and Means monies were given to State Governments as loans to augment budgetary short fall in their various States.Most of the request for funds for increase in Ways and Means were made to Mr. President on the need to finance the budget due to revenue shortfall.
“Such requests were either made by the Hon. Minister of Finance, Budget and National Planning or the Central Bank Governor.The Federal Government as a result of revenue shortfalls occasioned by the COVID-19 pandemic and low oil prices, relied heavily on the Ways and Means to finance it’s budget deficit to keep the country working for the people.
“The monies received by the Federal Government were actually used ffunding of critical projects across the countr.Due to the serious short fall in Government Revenue, the Federal Government in order for the economy not to collapse, was compelied to borrow repeatedly from the CBN, exceeding the 5 percent threshold of the prior year’s revenue as stipulated by the CBN Act, 2007.
“The Federal Government through the Ministry of Finance, Budget, and National Planning has concluded plans to convert the CBN loans to tradeable securities such as treasury bills and bond issuance,” the lawmaker said.
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 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.”
The President of the Senate, Ahmad Lawan, who presided over the plenary, after the approval of the fiscal document, noted that the Ways and Means Advances was a global practice.
He 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.
