Ways & Means: Senate Approves Buhari’s N22.7tn Loan Request
The Senate has approved the request of President Muhammadu Buhari, to restructure the N22.7tn loan from the Central Bank of Nigeria extended to the Federal Government under its Ways and Means provision.
The Ways and Means provision allow the government to borrow from the apex bank if it needs short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.
Since the government started experiencing a significant shortfall in revenue, it has relied heavily on the central bank to finance its expenditure programmes via Ways and Means which balance as of December 19, 2022, stood at N22.7tn.
The Federal Government had said it would repay the loan with securities such as treasury bills and bonds issuance.
Buhari had last year asked the Senate to approve his proposal to securitise the loan but the Red Chamber rejected the request, citing a lack of details.
Buhari, while appealing to the Senate to reconsider its stand, said failure to grant the securitisation approval will cost the government about N1.8tn in additional interest in 2023.
The Senate Leader, Ibrahim Gobir, who led the Senate in the debate for the approval of the Ways and Means on Wednesday, explained that part of the money was given as loans to states.
Gobir added that the Special Committee set up by the Red Chamber to scrutinise 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 CBN
The Senate Leader said the panel discovered that the Ways and Means balance was initially N19. 3tn (N19.326,745,239,660.20) as of June 30, 2022 but later grew to N22.7tn (N22,719,704,774,306.90 ) as of December 19, 2022 as a result of financial obligations to ongoing capital projects and additional expenditures which includes domestic debt service gaps and interest rate.
He noted that the Senate on Wednesday, December 28, 2022, approved the sum of N819,536,937,813 from the N1tn additional request made by the president leaving an outstanding balance of N180.4bn being the accrued interest on the sum.
Gobir further stated that the House of Representatives had earlier approved the additional N1tn Ways and Means Advances requested by the President to enable the smooth implementation of the supplementary budget.
Gobir said, “Part of the Ways and Means monies were given to State Governments as loans to augment budgetary shortfall in their various States.
“Most of the requests for funds for an increase in Ways and Means were made to Mr President on the need to finance the budget due to revenue shortfall. Such requests were either made by the Hon. Minister of Finance, Budget and National Planning or the Central Bank Governor.
“The Federal Government as a result of revenue shortfalls occasioned by the COVID-19 pandemic and low oil prices, relied heavily on the Ways and Means to finance its budget deficit to keep the country working for the people.”
