The Senate on Wednesday approved a bill to raise the percentage of Ways and Means loans that the Central Bank of Nigeria (CBN) can extend to the Federal Government.
The upper chamber increased the credit facility obtainable by the Federal Government from the apex bank, raising it from 5% to 10%.
These loans, known as the Ways and Means, provide short-term financing to the Federal Government to address budget shortfalls.
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To facilitate this, the Senate amended the CBN Act, increasing the total advances (loans) the CBN can provide to the Federal Government.
The amendment bill was considered during plenary on Wednesday, where it was read for the first time.
Senate Leader Opeyemi Bamidele explained that the bill, introduced by the executive, aims to enable the Federal Government to meet its immediate and future financial obligations due to increasing budgetary needs and other expenses.
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Bamidele noted that these loans would provide essential funds to cover budget shortfalls, finance key government expenditures, and maintain financial market stability by preventing the government from defaulting on its obligations.
He further stated that injecting these loans into the economy would stimulate economic activity, potentially create jobs, and allow the government to support critical sectors such as agriculture, healthcare, and infrastructure development. Additionally, the loans would lower the government’s borrowing costs by providing cheaper funds compared to traditional borrowing methods.
Bamidele and his colleagues argued for increasing the margin from 5% to 10%, emphasizing that while the increase is crucial for economic development, there should be enhanced monitoring of capital projects to ensure the funds are utilized effectively for infrastructure and legacy projects.
After being considered in the Committee of the Whole, the bill passed its third reading and was approved. It is now expected that President Bola Tinubu will sign the amended bill into law.
