At the twilight of President Mohammadu Buhari’s administration, Nigeria’s House of Representatives on Sunday approved the upward review of the borrowing limit of the federal government through the Ways and Means.
The House of Reps in concurrence with the upper chamber, Senate passed the amendment to the Central Bank of Nigeria (CBN) Act 2007, which now expanded the ability of the government to borrow more money by way of the regulatory bank printing new naira notes for the government to spend.
At an emergency plenary session on Sunday, the House of Representatives approved the amendment, which stipulates that the federal government can borrow up to 15 percent of the previous year’s revenue from CBN.
Prior to the amendment of the regulatory bank law, the government was limited to borrowing up to 5 percent of the previous year’s revenue through Ways and Means.
However, the government has been observing the CBN Act in breach as the borrowing through Ways and Means has exceeded 20 percent of the previous year’s revenue in the last eight years.
Global Financial Digest report on Saturday, that the Senate conducted an emergency plenary to amend the CBN Act to accommodate the upward adjustment of the borrowing limit for the government.
The bill was introduced in the House on Thursday by the Chairman of the House Committee on Banking and Finance, Victor Nwokolo, and was passed for second reading.
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The CBN Act Section 38(2) and (3) states, “That Ways and Means shall not exceed 5 percent of the previous year’s revenue of the Federal Government.”
However, the Chairman of the House Committee on Water Resources, Sada Soli, kicked against the approval.
“Mr. Chairman, does it mean with this amendment that the CBN somehow advances to government at 10 percent, or is it a wake-up call at the twilight of this government that we are changing this from five percent to 15 percent?
“Can the Chairman, Banking and Currency, kindly explain this not only to the National Assembly but to Nigerians?” Does it mean the CBN granted these advances at 15 percent, or what is going on? This is what we don’t know, Chairman.
The National Assembly last month approved the restructuring of the N22.7 trillion borrowed by the government through the CBN Ways and Means window previously to finance budget deficits.
Since the advent of Buhari’s administration, the government has ramped up the printing of naira notes to fund excessive budget deficits, which were expenditures not approved by parliament.
However, unless President Buhari assent to the amendment early on Monday before handing over the president-elect, Bola Tinubu, the legislation may have to wait for the signing into law by the incoming administration before the dissolution of the parliament in June.
(omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)
