Debt: Tinubu urged to reject CBN Act amendment on ‘ways and means’

The Centre for Social Justices (CSJ) has urged President Bola Ahmed Tinubu to withhold accent to the recent amendment to the Central Bank of Nigeria (CBN) Act by the National Assembly.

The Lead Director, CSJ, Eze Onyekpere and Program Manager, Public Finance Management, CSJ, Sundayson Chidi, made the call yesterday in Abuja.

The centre condemned the recent amendment to the CBN Act, increasing advances the CBN can grant to the Federal Government of Nigeria (FGN) from 5 percent to 15 percent.

He said the amendment contradicts best practices in fiscal responsibility and is an authorization of the Executive to create macroeconomic distortions through arbitrary and increased ways and means funding.

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“We recall that the extant S.38 of the CBN Act grants FGN access to ways and means financing in respect of temporary deficiency of budget revenue at such rate of interest as may be determined by CBN.

“If FGN has not been able to refund previous advances from the CBN at 5 percent of previous year’s revenue, what machinery did the amendment put in place to ensure that FGN will be in a position to repay 15 percent of previous years revenue by the end of its financial year?” he said.

Onyekpere said that previous high levels of advances led the Executive to incur over N23trn in ways and means which could not be repaid and had to be converted by the National Assembly to long term indebtedness contrary to the provisions of the CBN Act.

He said, “The option of resorting to ways and means to fund budgetary deficits further increases the already high inflation rate especially when done by printing money not backed by value. Thus, it erodes the value of the Naira, and real income; it reduces purchasing power of citizens.

“The amendment of the CBN Act did not follow due process; it was arbitrary and lacking in popular participation. There was no opportunity of a public hearing and publicity, to give room for Nigerians to make inputs on this very crucial matter with potentials to negatively affect overall economic growth and general welfare of the people.

“In the light of the foregoing, CSJ strongly appeals to President Bola Ahmed Tinubu to withhold assent to the bill. CSJ acknowledges the revenue challenges facing the nation but the implementation of this particular bill (if it becomes law) will create monumental macroeconomic challenges now and in the future.”