The Senate has amended the Central Bank of Nigeria (CBN) Act to accommodate a raise of the apex bank’s Ways and Means advances from the 5 percent currently to 15 percent of the previous year’s actual revenue of the Federal Government.
This is a major outcome of an emergency plenary by the red chambers on Saturday and presided over by the Senate President, Ahmad Lawan.
Ways and Means is a provision that allows the government to borrow from CBN if it needs short-term or emergency finance to fund delayed expected cash receipts of fiscal deficits.
This major policy shift comes just two days ahead of the inauguration of the incoming Bola Tinubu’s administration which faces tough challenges, including low revenues- and ignores various warnings including from the World bank and International Monetary Fund (IMF) against the CBN’s consistent funding of government.
The sponsor of the bill, Senator
Gobir Abdullahi said the Bill for an Act to Amend the Central Bank of Nigeria Act C4 Laws of the Federation of Nigeria 2004 and for other Matters Connected thereto, 2023 (SB. 1125) was read the Second Time and referred to the Committee of the Whole to consider the report.
He explained that there was need for the Ways and Means request to be increased from the current 5% to 15% to enable the Federal Government meet its financial obligations.
He said “The Bill seeks to amend the Central Bank of Nigeria, CBN, Act to increase the total CBN advances to Federal Government from five percent (5%) to a Maximum of fifteen percent (15%).
“The very essence of this Bill my respected colleagues is to enable the Federal Government meet its immediate and future obligation in the approval of the ways and means by the National Assembly and advances to the Federal Government by the Central Bank of Nigeria.”
The Bill for an Act to Amend the Central Bank of Nigeria Act C4 Laws of the Federation of Nigeria 2004 and for other Matters Connected thereto, 2023 (SB. 1125) was read the Third Time and passed.
Recall also that Section 38 of the CBN Act states: “Notwithstanding the provisions of the section 34(d) of this Act, the Bank (CBN) may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine. 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.
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.”
The Senate leader urged the support of Senators for the bill to pass, adding that it was important projects that will inflate and rejig the economy.
Senators who spoke on the floor agreed to the submission of leader and pointed out that the FG was saddled with enormous responsibilities, hence, the support.
Earlier in his remark, Senate President Ahmad Lawan commended lawmakers for their understanding and passed of the bill into law.
“This is not a normal sitting day. This is a Special session and I apologize for that. Essentially, what we are trying to do here is we have passed the Supplementary Budget and the implementation lapses end of June and majority of what is in that Act are roads and bridges that were destroyed by the 2022 floods.
“And of course, we need the roads to be fixed. If we don’t hasten it and the rain takes over, it may be near impossible to rehabilitate those roads and bridges.” Lawan.
Senate President said that the Senate will pass the Bill alongside with the House of Representatives so as to allow the implementation of the Supplementary Budget to continue after the stipulated June deadline.
Also passed was the 2022 supplementary Appropriation Act (Amendment) Bill, 2023 (SB. 1124) Frist reading, sponsored by the Senate Leade, Senator Gobir Abdullahi (Sokoto East)
The Bill is read the Second Time and referred to the Committee of Supply.
Leading the Debate on the floor of the Senate on Saturday,, Gobir said the important Bills seeks to amend the 2022 Supplementary Appropriation Act to extend the implementation year of from the 30th June 2023 to 31st December 2023 respectively.
He said given the critical importance of some key projects nearing completion, requesting a further extension of the expiration clause in 2022 Supplementary Appropriation Bill and the Long Title and Explanatory Memorandum is expedient to avoid compounding the problem of abandoned projects, given that some of the projects were not provided for in the 2023 Budget.
Gobir therefore urge the Senate to give their full support to this Bill to allow full utilization of the Capital releases in order to help reflate the economy while moving that the two bills be referred to the committee of the whole for clause by clause consideration.
Recall that the National Assembly extended the implementation of the 2022 Supplementary Appropriation Act from 31st December 2022 to March 31, 2023.
Senate adjourned Plenary to Tuesday, May 30, 2023.
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