The Nigerian Senate has expeditiously passed a Bill for an Act to amend the Central Bank of Nigeria Act to increase the apex bank’s total advances to the federal government from 5% to a maximum of 10%.
The executive Bill, sponsored by Bamidele Opeyemi, the Senate leader passed first, second and third reading during an emergency session of the Senate on Wednesday.
Ways and means is a loan facility through which the CBN finances federal government’s budget shortfalls. The facility allows the government to borrow from the CBN if it needs short-term or emergency finance to fund important projects.
The amendment bill initially proposed a borrowing limit of 15%, but several lawmakers however cautioned that the borrowing limit should not exceed 10% in order to ensure fiscal discipline.
Consequently, during a clause by clause consideration of the Bill, Abba Morro, the Deputy Senate minority moved for an ammndment, that the word 15% be substituted for 10% in clause 2. Majority Senators supported this amendment.
Also, Abdul Ningi moved for an amendment, that the borrowing should only be limited for capital expenditure but lawmakers murmured in disapproval, and no lawmaker seconded his motion.
Read also: CBN in H2 2024: Continue tightening or pause after July rate hike?
Opeyemi in his lead debate explained that the very essence of the Bill is to enable the federal Government meet its immediate and future obligation due to the government increasing needs for funds to finance the budget deficits and other expenses.
“The Central Bank of Nigeria’s Advances to the federal government are essentially loans that the Central Bank of Nigeria provides to the government to help it meet its financial obligations. These Advances are typically short-term and are expected to be repaid by the government”, he said.
The Senate leader further explained that the advances will provide immediate funds to address budget shortfalls and finance essential government expenditure; Help maintain financial market stability by preventing government default on its obligation.
He added that it will inject money into the economy, stimulating economic activity and potentially creating jobs;
Enable the government to support critical sectors like agriculture, health care and infrastructural development; and – Lower the government borrowing cost by providing cheaper funds that the traditional borrowing method.
“This amendment is very consequential and it needs the support of us all This is to enable the Federal Government to embark on very important projects that will inflate and rejig the economy especially the Renewal Hope Infrastructural Development across the country.
“This is the first time that both the executive arm and legislative arm are passing budget that has more capital than recurrent. I therefore urge you all to support the passage of this Bill”, Opeyemi said.
