The Senate, on Saturday, held an emergency session where it amended the Central Bank of Nigeria (CBN) Act, creating more space for borrowings.
The Senate increased the government financial borrowing from the CBN by 200%.
Senate also increased CBN advances to the Federal Government from 5% to a maximum of 15%.
The Upper Legislative Chamber, which sent out notice of its emergency session late Friday night to Senators, effected the increments by amending the CBN Act, increasing the Ways and Means borrowing threshold for the Federal Government.
This was as the lawmakers also extended the implementation of the 2022 Supplementary Appropriation Act from June 30, 2023 to December 31, 2023, to enable agencies of government to fully utilise the funds allocated to the various capital projects within the fiscal year.
Presenting the Bill for amendment of the CBN Act, the Senate Leader, Senator Ibrahim Gobir (APC, Sokoto), explained that the adjustment was required to enable the Federal Government meet its immediate and future obligations in the approval of the Ways and Means and Advances to the Federal Government.
LEADERSHIP reports that ‘Ways and Means’ are loans or advances by the Central Bank to the Federal Government, to enable it take care of short term or emergency finances to fund delayed government expected cash receipts of fiscal deficits.
The balance of the ‘Ways and Means’ owed the Central Bank of Nigeria by the Federal Government stood at N22.7 trillion as at December 19, 2022.
Meanwhile, in a letter to the President of the Senate, Ahmad Lawn, President Muhammadu Buhari explained that the breakdown of the 2022 supplementary budget as passed by the Senate indicated that N69billion was for the Ministry of Agriculture and Rural Development; N704billion for Works and Housing; N15.5billion for Water Resources while N30billion was earmarked for FCT, to address critical infrastructure destroyed by floods.
President Buhari pointed out that the N819.5billion supplementary budget would be financed by additional domestic borrowings.
The CBN Advances to the Federal Government stood at N700billion before 2015, with the borrowings exceeding the threshold of 5% of Federal Government revenue for the previous years, thereby violating Section 38 of the CBN Act.
Even more troubling was that most of the money were borrowed and spent without necessary approval by the Senate in clear violation of the Constitution.
The CBN Act says the CBN may grant temporary advances to the federal government in respect of temporary deficit of budget revenue at such rate as the bank may determine.
It, however, stipulates 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.”
In addition, it stipulates that, “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”
However, LEADERSHIP observed that some Senators were not happy with the emergency session of the Senate called by Lawan, just to help cover violations of the CBN Act and some sections of the Constitution by President Buhari, through his excessive borrowing above Federal Government threshold of 5%.
Senator Babba Kaita (PDP, Katsina), while contributing to the debate on the amendments, argued that there was no need to rush the amendments of both the CBN Act and the extention of implementation of the 2022 supplementary budget, noting that the Ninth Senate ought to have left the work for the incoming Assembly.
“We should leave these amendments to the incoming Assembly to do, if necessary. I thought there was something urgent or there was a seriously emergency that required our attention. I was already travelling when I got the notice for the emergency session. But as far as I am concerned, it is not an emergency,” Kaita stated.
Senator Gabriel Suswam (PDP, Benue), while speaking to journalists at the end of the emergency session, also expressed reservations for the excessive borrowing of the Federal Government under Buhari, saying that it would have adverse effects on the economy in future.
“I don’t want to say much about it now but I know that this excessive borrowing by the Federal Government will have negative effect on the economy. I know you want me to comment in detail but I don’t want to say more on the matter now,” he said.
In a related development, the Senate Leader, Senator Gobir, also led the debate on the extention of the 2022 supplementary Act implementation from June 30 to December 31, 2023.
“You would recall that the National Assembly extended the implementation of the 2022 Supplementary Appropriation Act from 31st December 2022 to 31st March, 2023. This was to allow full implementation of the budget, especially in light of the 2022 Supplementary budget approved in December 2022 the extension had allowed MDA’s to utilize a large proportion of funds released to them. However, significant amounts of funds remain with MDAs and will require a further extension to be fully expended.
“I therefore, urge my colleagues to give their full support to this Bill to allow full utilization of the Capital releases in order to help reflate the economy while I move that the two bills be referred to the committee of the whole for clause by clause consideration.”
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