•Says approval to pave way for supplementary budget 2022
Sunday Aborisade in Abuja
The Senate yesterday, approved the request of President Muhammadu Buhari to restructure the N22.7 trillion loans that the Central Bank of Nigeria (CBN) advanced to the federal government under its Ways and Means policy.
The Ways and Means provision allows 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.
The Buhari government said it sought the loans when the country started experiencing a significant shortfall in revenue.
It said it relied heavily on the central bank to finance its expenditure programmes via Ways and Means whose balance as of December 19, 2022, stood at N22.7 trillion.
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 lack of details.
The president while appealing to the Senate to reconsider its stand, said failure to grant the securitisation approval would however cost the government about N1.8 trillion 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 yesterday, explained that part of the advances were 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 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 on-going capital projects and additional expenditures which included domestic debt service gaps and interest rate.
He said the Senate on Wednesday, 28th December, 2022, approved the sum of N819, 536,937,813 from the N1 trillion additional request made by the president, leaving an outstanding balance of N180, 463,062,187, being the accrued interest on the sum.
Gobir, said the House of Representatives also, had earlier approved the additional N1 trillion Ways and Means Advances requested by the president, to enable the smooth implementation of the supplementary budget.
He added, “Part of the Ways and Means monies were given to state governments as loans to augment budgetary short fall in their various states.
“That most of the request for funds for 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.
“That 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.
“That the monies received by the federal government were actually used funding of critical projects across the country;
“That due to the serious short fall in government revenue, the federal government in order for the economy not to collapse, was compelled to borrow repeatedly from the CBN, exceeding the five per cent threshold of the prior year’s revenue as stipulated by the CBN Act, 2007.
“That the federal government through the Ministry of Finance, Budget, and National Planning has concluded plans to convert the CBN loans to tradeable securities such as treasury bills and bond issuance.”
Gobir, said the Senate Special Committee after exhaustive deliberations, recommended among others, the restructuring of N22,719,703,774,306.90 for Ways and Means Advances be approved because the advances were made to ensure that the government does not shutdown.
According to him, 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 Means Advances.
Other recommendations were, “That if there is a need to exceed the five per cent threshold of the prior year’s revenue, recourse must be made to the National Assembly for approval;
“That the federal government should begin the process of recovering the portion of the Ways and Means given as the loans to state governments as further deferment of the repayment of the loans by the States will not be healthy for the economy;
“That the federal government through the Ministry of Finance, Budget and National Planning should expedite action on the repayment of the loans through treasury bills and bond issuances.
“That the National Assembly will not condone future increase in the Ways and Means without seeking the approval of the National Assembly.”
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 parliament would be able to consider and pass the 2022 Supplementary Budget still pending before the two chambers.
Lawan said, “I don’t see any National Assembly standing against any infrastructure development like building of roads and bridges among others.
“It is therefore very important that before the executive incurred this kind of huge Ways and Means Advances, should, as a matter of must, seek the approval of the National Assembly.
“Where for, whatever reason, an emergency happened, it should not take them this kind of period before a request is sent to the National Assembly for approval.
“We have to pass this Ways and Means Advances because we don’t want the government to be shut down.
“The Supplementary budget 2022, is on hold at the moment because we could not pass the Ways and Means request.
“However, with the passage of the Ways and Means Advances today, the Supplementary budget 2022, which essentially is to rehabilitate damage roads and bridges across the country, will be fixed.”
