The Nigerian Senate has approved the request of President Muhammadu Buhari to restructure the N22.7 trillion loans that the Central Bank of Nigeria (CBN) extended to the federal government under its Ways and Means provision. The Ways and Means provision allows the government to borrow from the apex bank for short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.
The government relied heavily on the central bank to finance its expenditure programmes via Ways and Means since it started experiencing a significant shortfall in revenue. The balance of the loan as of December 19, 2022, stood at N22.7 trillion. The Federal Government had earlier promised to repay the loan with securities such as treasury bills and bond issuance.
President Buhari had requested the Senate to approve his proposal to securitize the loan last year, but the Red Chamber rejected the request citing lack of details. However, Buhari appealed to the Senate to reconsider its stand, saying that failure to grant the securitization approval would cost the government about N1.8 trillion in additional interest in 2023.
On Wednesday, the Senate Leader, Ibrahim Gobir, led the Senate in the debate for the approval of the Ways and Means. He explained that part of the money was given as loans to states. The Special Committee set up by the Red Chamber to scrutinize the fiscal document put up the report after critical analysis and review of submissions made by the Federal Ministry of Finance, Budget and National Planning; and the Central Bank of Nigeria.
The Senate Leader said the panel discovered that the Ways and Means balance was initially N19,326,745,239,660.20 as of 30th June 2022 but later grew to N22,719,704,774,306.90 as of 19th December 2022 as a result of financial obligations to ongoing capital projects and additional expenditures which include domestic debt service gaps and interest rates.
On Wednesday, 28th December 2022, the Senate approved the sum of N819,536,937,813 from the one trillion naira additional request made by Mr. President, Commander-In-Chief of the Armed Forces, leaving an outstanding balance of N180,463,062,187 being the accrued interest on the sum. The House of Representatives had earlier approved the additional one trillion naira Ways and Means Advances requested by Mr. President, Commander-In-Chief of the Armed Forces to enable the smooth implementation of the supplementary budget. Part of the Ways and Means monies were given to State Governments as loans to augment budgetary shortfalls in their various States.
The Senate Special Committee recommended among others, the restructuring of N22,719,703,774,306.90 for Ways and Means Advances to be approved because the advances were made to ensure that the government does not shutdown. The panel further sought the approval of the Senate for the sum of N180,463,062,187 being the balance of the supplementary budget and the interest accrued on the Ways and Mean Advances.
Senate President, Ahmad Lawan, after the approval of the fiscal document, noted that the Ways and Means Advances was a global practice. He, however, faulted the process adopted by the executive arm of government which failed to carry the National Assembly along while accumulating the huge amount of loans. Lawan added that the Senate had to pass the Ways and Means Advances so that the federal government does not shut down. If there is a need to exceed the 5 per cent threshold of the prior year’s revenue, recourse must be made to the National Assembly for approval. The Federal Government should begin the process of recovering the portion of the Ways and Means given as loans