The Senate has amended the Act establishing the Central Bank of Nigeria (CBN) to increase the amount the federal government can borrow from the apex bank.
It also approved a six-month extension for the implementation of the N819 billion 2022 Supplementary Appropriation Act.
The Red Chamber passed the amendment and extended the supplementary budget lifespan at an emergency session held yesterday.
The CBN, under its Ways and Means Advances, had extended about N22.7trn loan to the federal government as of December 19, 2022.
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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But the CBN’s N22.7trn loan to the federal government violated the extant law as the advances are far above the threshold the apex bank is empowered to grant the government.
Section 38 of the CBN Act states: “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.”
If the CBN had adhered to its laws, its loan to the government for the entire 2022 should not exceed N219bn (5 per cent of the government’s revenue in 2021).
At an emergency session on Saturday, the Red Chamber amended the CBN Act to increase the total CBN advances to federal government from five percent (5%) to a maximum of fifteen percent (15%).
The Senate Leader, Ibrahim Gobir, during a lead debate on the bill, said the amendment was to enable the 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 CBN.
The Senate also approved a six-month extension for the implementation of the N819bn 2022 Supplementary Appropriation Act.
The implementation period was to expired June 2023. But the Senate said the extension of time till December 31, 2023 became necessary to enable the federal government fund the budget, which is meant to fund critical infrastructure destroyed by the 2022 flood episode.
The Senate on Saturday suspended its rules and granted the two bills accelerated consideration and passage.