The President of the Senate, Ahmad Lawan, has given conditions which must be met before the National Assembly can reconsider the proposal to securitize the Federal Government’s outstanding Ways and Means balance at the Central Bank of Nigeria (CBN).
He gave the conditions Tuesday in Abuja while fielding questions from State House reporters after President Muhammadu Buhari had signed into law the 2023 Appropriation Bill along with the 2022 Supplementary Appropriation Bill.
President Muhammadu Buhari had penultimate week asked the Senate to restructure the Ways and Means advances to raise the amount to N23.7trn with a tenor of 40 years, three years moratorium on repayment, and an interest rate of 9 per cent.
The Ways and Means provision allows the government to borrow from the apex bank if it needs short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.
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However, the Senate had last Wednesday rejected the request of the President to restructure the N22.7 trillion loans the CBN extended to the federal government under its Ways and Means provision.
Since the government started experiencing a significant shortfall in revenue, it has relied heavily on the central bank to finance its expenditure programmes via Ways and Means which balance as of December 19, 2022 stood at N22.7 trillion.
President Buhari, while speaking after signing the 2023 budget, urged the National Assembly to reconsider its position on his proposal to securitize the Federal Government’s outstanding Ways and Means balance at the CBN.
“As I stated, the balance has accumulated over several years and represents funding provided by the CBN as lender of last resort to the government to enable it to meet obligations to lenders, as well as cover budgetary shortfalls in projected revenues and/or borrowings.
“I have no intention to fetter the right of the National Assembly to interrogate the composition of this balance, which can still be done even after granting the requested approval.
“Failure to grant the securitization approval will however cost the government about N1.8 trillion in additional interest in 2023 given the differential between the applicable interest rates which is currently MPR plus 3% and the negotiated interest rate of 9% and a 40year repayment period on the securitised debt of the Ways and Means,” he said.
Reacting to a question on whether the National Assembly would reconsider the proposal of the president, Lawan said: “We are already considering that, but let me tell you where the problem is. While we are trying to consider and pass the request. We will insist on getting the right documents for our committees to ensure that whatever they advise us to do in the two chambers are based on information and knowledge and not just passing ways and means without knowing what it is.”