The Nigerian Senate in an emergency session on Saturday amended the Central Bank Act increasing the Ways and Means borrowing threshold for the Federal Government from 5% to a maximum of 15% from the Central Bank of Nigeria (CBN).
This was also as the senate amended the 2022 Supplementary Appropriation Act extending its validity by six months.
In a rare manner, the Senate returned to plenary on Saturday for an emergency session, granting accelerated considerations and passage to two separate but related bills.
On one hand is the amendment of the CBN Act, increasing the threshold of borrowings otherwise known as “Ways and Means” from the apex bank from 5% to 15% of FG revenue for the previous year.
According to the Senate Leader, Ibrahim Gobir, the amendment was required to help government meet its immediate and future obligations in the approval of the ways and means and advances to the Federal Government.
The CBN advances to the FG stood at N700 billion before 2015. The borrowing rose to N22.7 trillion as at December 2022, exceeding the threshold of 5% of FG, thereby violating Section 38 of the CBN ACT.
Even more troubling was that the monies were borrowed and spent without necessary approval from the senate in clear violation of the law.
In addition, the CBN Act further stipulates that all advances shall be repaid with the same financial year they were borrowed and if such advances remain unpaid at the end of the year, the power of the CBN to grant further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid”.
The FG has repeatedly violated this condition.
Senate in December passed N819 billion Supplementary Budget for 2022 following request by President Muhammadu Buhari to borrow additional N819 billion from the CBN to finance critical infrastructure damaged by flood across the country.
The borrowing increased FG’s Ways and Means to a whooping N23 trillion, slightly higher than the budget for 2023.
But the releases for the supplementary budget whose implementation is expected to end in June 2023 had been slow in coming, explaining why the Senate in a last minute push returned to work on a Saturday to amend the 2022 Supplementary Appropriation Act amendment bill extending its validity to December, 2023.
In doing so, the Senate also amended the CBN Act extending the borrowing threshold from 5% to 15%, providing possible legal backing for the excess borrowings in the last 7 years and give room for the incoming government to borrow more.
Omor Bazuaye
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