The Nigerian Senate on Saturday, in an emergency plenary session, amended the Central Bank of Nigeria (CBN) Act by increasing the borrowing limit, Ways and Means (W/M) provision, to the Federal Government from the Central Bank of Nigeria, (CBN).
Consequently, the nation’s upper chamber has boosted the controversial borrowings from CBN, from 5 to 15 percent of the previous revenue estimate, possibly ending the alleged impunity and disregard for the rule of law by the outgoing president Muhammadu Buhari and CBN Governor, Godwin Emefiele, as far as the W/M is concerned.
The implementation year for the 2022 Supplementary Appropriation Act was also extended, providing extension of implementation year from June to December 31, 2023.
In the reckoning of the Senate, their action will enable the Federal Government to meet its immediate and future obligations in the approval of the ways and means by the National Assembly and advances to the Federal Government by the CBN.
Specifically, it was to allow full implementation of the budget, especially in light of the 2022 supplementary budget approved in December 2022. The extension had allowed the Ministries, Departments, and Agencies (MDAs) of government to utilise a large proportion of funds released to them.
This is because, according to the Senate Leader, Abdullahi Gobir, a significant amount of funds remain with MDAs and will require a further extension to be fully expended.
He said that considering the critical importance of some key projects nearing completion, requesting a further extension of the expiration clause in the 2022 Supplementary Appropriation Bill is expedient to avoid compounding the problem of abandoned projects as some of them were not provided for in the 2023 Budget.
According to some analysts, this will provide opportunity to the bureaucrat in the civil service to embark on ‘spending spree’ particularly at the end of each year. What they would need will be justifications for the spending on what they would regard as ‘critical sectors’ of the economy.
However, CBN, under its Ways and Means Advances, had extended about N22.7 trillion loan to the federal government as of December 19, 2022.
The Ways and Means provision allows the government to borrow from the apex bank if it needs short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.
But the CBN’s N22.7 trillion loan to the federal government violated the extant law as the advances are far above the threshold the apex bank is empowered to grant the government.
Section 38 of the CBN Act states: “The Bank (CBN) may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine.
“The total amount of such advances outstanding shall not at any time exceed five (5) percent of the previous year’s actual revenue of the Federal Government.”
If the CBN had adhered to its laws, its loan to the government for the entire 2022 should not have exceed N219 billion (5 per cent of the government’s revenue in 2021).
But analysts are worried that the amendment at the twilight of this administration may, besides, legalising the illegality, equally lead to emergency borrowing by the outgoing administration.
The fears are reinforced by last minutes borrowings and actions, like the unveiling of the national carrier by the outgoing Aviation Minister, Hadi Sirika, without fuller understanding of details by the public.
“From all indications, the possibility of borrowing more from CBN within the few days remaining in the life of this administration can never be ruled out. More so that president has directed his Ministers to continue in office till the last day,” says an analyst who pleaded for anonymity.
Others are worried that the yearly financial reports of CBN have not been in public domain for some time. “How are we sure that outgoing president has not incurred more more borrowings or planning for more from CBN, even before the emergency legislation by the Senate, considering, the ‘disturbing and unholy romance’ between the president and the National Assembly. Of course, the general impression of the public is that the nineth National Assembly was a kind of rubber stamp of the president. With all these in mind, your guess is as good as mine,” says a retired banker.
The sad memories of Naira redesign, high level of public debt, impunity by elected and appointed leaders as well as senior civil servants have created wide gulf between the people and the government, which has increased trust deficit on the government and some of its agencies, like CBN.
Some analysts, are requesting, from Buhari, as part of the handover note, the current amount of federal government exposures to CBN, under the ways and means provision.
According to them, the incoming administration should as much as possible, end the mystery surrounding the oil subsidy while gradually ending the regime, and should as well not allow the Ways and Means attract similar public outcry.