The National Assembly is reportedly in a session deliberating on how to increase the Ways and Means provision from 5% to 15%.
This is in a bid to collect an additional N1.2 trillion from the central bank which is an equivalent of 15% of last year’s budget of N8.2 trillion.
According to a source who spoke to Nairametrics on the condition of anonymity, some section of the National Assembly made plans to meet on Saturday to discuss modalities to get the apex bank to allow it to draw another N1 trillion from the apex bank.
According a draft bill seen by Nairametrics, the provision seeks to amend section 38 of the CBN Act by substituting the words “five percent” with the words “Fifteen percent”.
The CBN Act 2022 Act (in this Bill referred to as the “Principal Act*) is amended as set out in this Bill: Amendment of Section 38.
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The Bill is also titled “REPORT OF A BILL FOR AN ACT TO AMEND THE CENTRAL BANK OF NIGERIA ACT C4 LAWS OF THE FEDERATION OF NIGERIA 2004 AND FOR OTHER MATTERS CONNECTED THERETO, 2023 (SB. 1125).”
Some members of the Nigerian Senate are said to be meeting to consider the bill. According to some sources who spoke to Nairametrics, they suggested that the bill if approved might be signed by the Buhari administration before they hand it over on Monday 29th of May 2023.
If they convince the president to sign this bill, it will likely be his last major act under his regime, potentially labeling his administration as a debtor government.
Public debt, inclusive of Ways and Means has risen to over N70 trillion under Buhari.
Recall that the Buhari Administration has collected an additional N4 trillion in Ways and Means in the last three months taking the total extra-budgetary printing to N26 trillion.
At N4 trillion, the extra drawing of the government is already about 36% of the 2023 FG annual budgeted revenue of N11 trillion. Last year’s revenue target was N8.2 trillion thus almost 50% of the budget.
The Ways and Means provision allows the government to borrow from the Central Bank of Nigeria (CBN) if it needs short-term or emergency finance to fund delayed government expected cash receipts.
However, the provisions in the act set a limit on the financing of fiscal deficits at 5% of the prior year’s revenues.
Nevertheless, the government has breached this position over the years but to legalize the breach, the Buhari government presented a bill to the national assembly to approve the conversion of the loan into a national debt.
Recall that the National Assembly recently approved the securitization of Nigeria’s Ways and Means loans currently estimated at about N22.7 trillion, paving the way for the legislation of the controversial debt. The debt, which is for a tenure of 40 years, attracts an interest rate of 9% per annum with repayment of principal starting after 3 years.
