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HomeTop NewsSenate approves securitisation of N23.7 trln CBN overdraft to federal govt

Senate approves securitisation of N23.7 trln CBN overdraft to federal govt

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The Senate has approved the restructuring of the controversial N23.719 trillion Central Bank of Nigeria’s (CBN) overdraft to the federal government.

The upper chamber gave the approval during Wednesday’s plenary session after considering a report from its ad hoc committee, which noted that the federal government repeatedly borrowed from the CBN, exceeding the five percent threshold of the previous year’s revenue as stipulated by the CBN Act.

President Buhari’s request for the National Assembly to restructure the sum of N23.719 trillion through ways and means was met with suspicion and opposition by federal lawmakers in the Senate.

In his letter to the Senate, which was read on the floor on December 21, 2022, he explained that the ways and means of advances given to the Federal Government by the CBN are for emergency funding of delayed receipt of fiscal deficit.

However, some senators were opposed to approving the overdraft, explaining that it contravened the constitution and the CBN Act.

Leading the Senate in the debate for the approval of Ways and Means on Wednesday, the Senate Leader, Ibrahim Gobir, explained that part of the money was given as loans to states.

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He explained that the Special Committee was set up by the upper legislative Chamber to scrutinize the fiscal document and 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.

In December, President Buhari had sent a request for approval of restructuring of N23.7 trillion Ways and Means advances given to the Federal Government by the CBN.

In the letter to the President of the Senate, the president said the Ways and Means are advances from the CBN to the federal government for emergency funding of delayed receipt of fiscal deficit.

”The ways and means advance by the central bank of Nigeria, to the federal government has been a funding option to the federal government to cater for short term or emergency finance to fund delayed government expected cash receipt of physical deficit.

“The ways and means, balances as of December 19, 2022 is N23,719,703,774,306.90.

“I have approved the securitization of the ways and means balances along the following terms ÷ Amount. N23 .7 trillion tenors of 40 years, Moratorium on principal repayment, three years, Pricing interest rate 9 percent,

“Your concurrence and approval is sought to allow for the implementation of same”

(omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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