THE Senate and the House of Representatives today 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 Senate increased the credit limit available to the Federal Government from 5% to 10% through the apex bank.
The Ways and Means program provides short-term financing to the Federal Government to help cover budget deficits.
To facilitate this, the Senate amended the CBN Act to allow for greater total advances (loans) from the CBN to the Federal Government.
The amendment bill was introduced and read for the first time during today’s plenary session.
Senate Leader Opeyemi Bamidele explained that the executive bill aims to help the Federal Government meet its immediate and future financial obligations due to rising funding needs for budget deficits and other expenses.
He noted that these loans will provide immediate funding to address budget shortfalls and essential government expenditures while also helping to maintain financial market stability by preventing defaults on government obligations.
Bamidele emphasized 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.
He also mentioned that the loans would reduce the government’s borrowing costs by offering cheaper funding compared to traditional borrowing methods.
Opeyemi and his colleagues debated that the margin of increase should be from 5 to 10 per cent, asserting that while this increase is crucial for economic growth, there should be enhanced monitoring of capital projects to ensure funds are dedicated solely to infrastructure and legacy projects.
After review in the Committee of the Whole, the executive bill scaled its third reading.
Similarly, the House of Representatives amended the CBN Act to raise the Ways and Means limit from 5% to 10%.
President Bola Tinubu is expected to sign the amended bill into law.