On Wednesday, the Senate and House of Representatives passed legislation to enhance the percentage of Ways and Means loans that the Central Bank of Nigeria (CBN) can make to the federal government.
The upper chamber of the Nigerian legislature increased the Federal Government’s credit limit with the apex bank from 5% to 10%.
The apex bank, known as Ways and Means, provides the federal government with short-term credit to bridge budget gaps.
To do this, the Senate changed the CBN Act to enhance the total CBN advances (loans) to the federal government.
The bill to alter the CBN Act was debated in plenary on Wednesday and was read for the first time.
The Senate Leader, Opeyemi Bamidele, stated that the executive bill, which was read for the first time on Wednesday, will allow the Federal Government to satisfy its present and future responsibilities due to the government’s increasing need for funds to cover budget deficits and other expenses.
He explained that the loans would allow for the prompt release of funds to resolve budget shortages and support vital government expenditures, as well as contribute to financial market stability by avoiding the government from defaulting on its obligations.
Bamidele stated that the loans, when injected into the economy, will boost economic activity, potentially create jobs, and allow the government to fund important areas such as agriculture, healthcare, and infrastructure development.
He noted that the loans will reduce the government’s borrowing costs by delivering less expensive funding than traditional borrowing methods.
Opeyemi and his colleagues believed that the margin of increase should be 5 to 10%.
They argued that, while the increase was required for economic development, adequate supervision of capital projects should be improved to guarantee that the funds are used just for infrastructure and legacy projects.
Following deliberation in the Committee of the Whole, the executive measure passed on third reading.
Like the Senate, the House of Representatives changed the CBN Act to increase Ways & Means from 5% to 10%.
President Bola Tinubu is expected to sign the modified measure into law.
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