In order to amend to amend section 38 of the Central Bank of Nigeria Act (CBN) Act 2004, the Senate is currently in emergency plenary, deliberating on how to increase the Ways and Means provision from 5% to 15%.
The plenary was fixed for 10 a.m. on Saturday, but the session started a few minutes past 11 a.m.
The Bill is also titled “REPORT OF A 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).”
The Ways and Means provision allows the government to borrow from the Central Bank of Nigeria (CBN) if it needs short-term or emergency finance to fund delayed government expected cash receipts.
However, the provisions in the act set a limit on the financing of fiscal deficits at 5% of the prior year’s revenues.
Nevertheless, the government has breached this position over the years but to legalize the breach, the Buhari government presented a bill to the national assembly to approve the conversion of the loan into a national debt.
The National Assembly recently approved the securitization of Nigeria’s Ways and Means loans currently estimated at about N22.7 trillion, paving the way for the legislation of the controversial debt. The debt, which is for a tenure of 40 years, attracts an interest rate of 9% per annum with repayment of principal starting after 3 years.