The National Assembly has approved the securitisation of the outstanding debit balance of N7.3trn of the Ways and Means Advance in the Consolidated Revenue Fund (CRF) of the Federal Government.
This followed the consideration of President Bola Tinubu’s letter which he addressed to the presiding officers of the National Assembly.
Tinubu’s request was subsequently considered at the Committee of Supply and approved at plenary due to its urgency.
Ways and Means is a loan facility through which the CBN finances the government’s budget shortfalls.
The letter by the President is titled, “Securitization of the debit balance of ways and Means in the consolidated revenue fund of the Federal Government of Nigeria.”
It read, ” I would like to call the attention of the Senate to the provisions of section 38 of the subsisting CBN Act 2007.
“It stipulates that the apex bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue provided such overdraft does not surpass 5% of the Government revenue from the previous year.
“The Senate is invited to note that from available information by the CBN the Consolidated Revenue Fund (CRF) account of the Federal Government of Nigeria (FGN) stood at N7.3trn as of December 11, 2023 that is due to domestic debt servicing, Principal and interest.
“While the Federal Government is considering various measures to forestall the use of Ways and Means advances for domestic debt servicing, it has become highly imperative to securitise the outstanding Ways and Means Advance of the Federal Government of Nigeria before the end of the year 2023.
“The securitization of the Ways and Means will lead to the realisation of the following benefits amongst others:
“Reduction of debt service costs as interest rate for the securitize Ways and Means advanced is lowered at 9% per annum compared to MBR which is 0.3%
“The savings arising from the much lower interest rate will have to reduce the deficit in the budget.
“The improvement in debt transparency as securitised Ways and Means Advances are included in the public debts statistics.
“In view of the foregoing the senate is invited to kindly consider and approve the securitisation of the outstanding debit balance of N7.3tr in the same order as at December 2023.
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