Reps in emergency session, amend CBN Act, increase FG’s CBN’s borrowings from 5 to 15 percent

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Reps in emergency session, amend CBN Act, increase FG’s CBN’s borrowings from 5 to 15 percent

The federal government has now been legally empowered to request up to 15 percent Ways and Means loans from the Central Bank of Nigeria (CBN).

The was made possible by the upward review of the government access to the loans via the expedited amendment of the CBN Act 2007 and passage of same into law by the House of Representatives in an emergency plenary session on Sunday.

For purposes of recapitulation, under the CBN Act, the Ways and Means provision allows the government to borrow from the apex bank for a short-term or emergency finance to fund delayed government expected cash receipt of fiscal deficit.

The Act stipulates that the Ways and Means must be restricted 5 percent of the previous year’s revenue.

The House had on May 4, 2023 approved an additional N1 trillion Ways and Means for the implementation of the 2022 Supplementary Appropriation Act as passed by the National Assembly as the loans hit N23.7 trillion

The House also approved the Securitization of the total outstanding Ways and Means amount under the following terms: Amount (N23,719,703,774,306.90), Tenure (40 years) , Moratorium on Principal Repayment (3 years), and Pricing/Interest Rate (9 percent per annum).

The CBN Act Section 38(2) & (3) states, “that Ways and Means shall not exceed 5% of the previous year’s revenue of the Federal Government.”

It also be recalled that the Senate first passed the request in an emergency sitting on Saturday before the House.

The Chairman, House Committee on Banking and Finance, Victor Nwokolo had previously introduced the bill that subsequently passed for second reading on Thursday.

But during the consideration of the bill at the emergency session, the Chairman, House Committee on Water Resources, Hon. Sada Soli raised an objection to the exercise, demanding more explanation as to increase.

He said: “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 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 this advances at 15 percent or what is going on? This is what we don’t know Chairman.

“I’m a member of the Committee on Banking and Currency. I didn’t know when this discussion took place. I can stand on privilege Order 6 to call for an explanation as a member of this Committee, how we reached at this amendment, please?”

Responding, the Deputy Speaker, Hon Ahmed Wase, who chaired the Committee of the Whole said: “Hon. Sada the only explanation I may attempt to give if I listened to you very carefully is this, the Chair has the right to commit after second reading any bill to the Committee of the Whole.

“It is there contained in our Standing Order. It depends on the importance and the exigency of the moment. And in light of this I want to beg our Colleagues to please consider this amendment and we pass it so that we have the right thing done.”

The amendment however eventually passed and it’s expected to transmit to President Muhammadu Buhari for his assent before he leaves office upon the expiration of his 8 year term midnight today.

Similarly, the House passed a bill seeking to extend the implementation of the capital aspect 2022 Supplementary Appropriation Act from 30th June, 2023 to 31st December, 2023.

Essentially, the bill sought the approval N819 billion for capital expenditure.

Raising the budget deficit for 2022 to N8.17 trillion and deficit GDP ratio to 4.43 percent, the bill was considered at the committee of supply during the emergency session.

In the same vein, the House also passed a Bill seeking to repeal the Produce (Enforcement of Export Standards) Act, 2004 to enact the Federal Produce Inspection Service (Enforcement of Export Standards) (Establishment) Bill, 2023 to provide for the Inspection and enforcement of Grades and Quality Standards of Produce and Commodities intended for Export from Nigeria at Ports of Shipment.

The bill was passed after the adoption of the recommendations at the Committee of the Whole, chaired by the Speaker, Rep. Femi Gbajabiamila.

The House however put on hold the consideration of a bill seeking to repeal the Revenue Mobilization, Allocation and Fiscal Commission Act, 2004 and enact the Revenue Mobilization, Allocation and Fiscal Commission Bill to grant the Commission enforcement powers in the monitoring of accruals to and disbursement of revenue from the Federation Account and to bring the Act in conformity with the provisions of the 1999 Constitution (as amended).

Meanwhile, the emergency session witnessed the defection of a member, Hon Olododo Cook from the Social Democratic Party (SDP) to the All Progressives Congress (APC)

Speaker Femi Gbajabiamila read the defection letter of the member from Kwara State.

The will reconvene on Tuesday, May 30, 2023 for usual plenary session.