The Senate grants Buhari's request for a N22.7 trillion loan, according to Ways & Means Committee.

The Senate grants Buhari's request for a N22.7 trillion loan, according to Ways & Means Committee. The Central Bank of Nigeria loan ...

The Senate grants Buhari's request for a N22.7 trillion loan, according to Ways & Means Committee.

The Central Bank of Nigeria loan of N22.7 trillion that was given to the Federal Government under its Ways and Means provision has been restructured, as requested by President Muhammadu Buhari, and has been authorized by the Senate.

The Ways and Means clause permits the government to borrow money from the apex bank in an emergency or for a short period of time to cover fiscal deficits caused by delayed government expected cash receipts.

The government has relied extensively on the central bank to finance its expenditure programs through Ways and Means, whose balance as of December 19, 2022, was N22.7 trillion. This has happened because the government began to experience a substantial shortfall in revenue.

The Federal Government had promised to pay back the loan using treasury bills and bond issuance, among other securities.

Last year, Buhari requested that the Senate accept his plan to securitize the debt, but the Red Chamber refused, citing a lack of information.

While pleading with the Senate to change its mind, Buhari claimed that the government would lose N1.8 trillion in additional interest in 2023 if the securitization approval was not granted.

Ibrahim Gobir, the Senate Leader, who presided over the Senate's discussion on Wednesday about the Ways and Means bill, clarified that some of the funds were distributed to the states in the form of loans.

Gobir continued by stating that the Federal Ministry of Finance, Budget, and National Planning, as well as the CBN, submitted their submissions to the Special Committee established by the Red Chamber to examine the fiscal document.

According to the Senate Leader, the panel found that the Ways and Means balance increased from N19.3 trillion (N19.326,745,239,660.20) as of June 30, 2022, to N22.7 trillion (N22,719,704,774,306.90) as of December 19, 2022, due to financial obligations to ongoing capital projects and additional expenses, including domestic debt service gaps and interest rates.

He mentioned that the N1 trillion extra request made by the president was accepted by the Senate on Wednesday, December 28, 2022, leaving an unpaid amount of N180.4 billion, which is the interest that has accrued on the N819,536,937,813.

Gobir added that the additional N1 trillion in Ways and Means Advances that the President had requested in order to facilitate the successful execution of the supplemental budget had already been authorized by the House of Representatives.

A portion of the Ways and Means funds were granted to State Governments as loans to help cover budgetary shortfalls in their various States, according to Gobir.

Mr. President received the majority of the funding requests for an increase in Ways and Means related to the need to finance the budget because of a revenue shortfall. Either the Central Bank Governor or the Honorable Minister of Finance, Budget, and National Planning issued such requests.

Due to income deficits brought on by the COVID-19 epidemic and low oil prices, the Federal Government largely relied on the Ways and Means to finance its budget deficit in order to keep the nation operating for the benefit of its citizens.

The Senate leader continued, "The money that the Federal Government received was really used to fund important initiatives all around the nation.

"That the Federal Government was regularly forced to borrow from the CBN, surpassing the 5% threshold of the prior year's revenue as mandated by the CBN Act, 2007, due to the substantial shortage in government revenue, in order to prevent the economy from collapsing.

"That the Federal Government, acting through the Ministry of Finance, Budget, and National Planning, has concluded plans to convert the CBN loans to tradable securities such as treasury bills and bond issuance."

According to Gobir, the Senate Special Committee suggested, among other things, that the restructure of N22.7tn for Ways and Means Advances be accepted because the advances were provided to prevent the government from shutting down.

The panel also asked the Senate for permission to spend N180.4 billion, which represented the remaining balance of the supplementary budget and interest on the Ways and Mean Advances.

Other recommendations included, "Recourse must be made to the National Assembly for approval if there is a need to exceed the five percent threshold of the prior year's revenue.

Further postponing the States' loan repayment will be detrimental to the economy, so the Federal Government should start the process of reclaiming the portion of Ways and Means allocated as loans to State Governments.

"The Federal Government should move quickly to repay the debts through the issuing of treasury bills and bonds, according to the Ministry of Finance, Budget, and National Planning.

Future Ways and Means increases cannot be approved by the National Assembly without first requesting their permission.

After the fiscal document was approved, Senate President Ahmad Lawan noted that the Ways and Means Advances was a common practice all over the world.

However, he criticized the method used by the executive branch of government, which fell short of advancing the National Assembly while racking up a sizable debt.

Lawan added that in order for the federal parliament to discuss and approve the 2022 Supplementary Budget, which is still pending before the two chambers, it was necessary for the Senate to adopt the Ways and Means Advances.