As requested by President Bola Tinubu, the Senate has approved and endorsed the securitization of the outstanding 7.3 trillion naira Ways and Means.
The Ways and Means clause authorises the government to borrow from the Central Bank in the event that it requires short-term or emergency financing to support delayed government projected cash receipts of fiscal deficits.
According to the President’s letter to the Senate, the securitization of Ways and Means would result in a reduction in debt service costs.
The letter added that the interest rate for the securitized Ways and Means advances lowered at 9% per annum compared to MPR which is +3%.
The request which is not a new borrowing is to extend the repayment period of the existing loans.
The terms of the securitization of the Ways & Means advances as gazetted by the Debt Management Office (DMO) involve the issuance of debt securities with a 40-year tenor by the Federal Government to the CBN, with an interest rate of 5% and a 3-year moratorium on principal repayments.