Economy
Buhari Gets Lawmakers’ Nod to Borrow N1tn From CBN’s WMAs
President Muhammadu Buhari has obtained the approval of the House of Representatives, to access a fresh N1 trillion loan from the Ways and Means Advances (WMAs) by the Central Bank of Nigeria (CBN).
The Ways and Means Advances where the federal government can access funds is a loan facility by the CBN to finance the government during temporary budget shortfalls subject to limits imposed by law.
The President had in a letter he sent to the Senate and House of Representatives in December last year, requested the approvals of the National Assembly to its restructuring of N1tn WMAs, and another N22,719,703,774,306.90 loan from the CBN.
Upon reception of the letter, the duo of President of the Senate, Ahmad Lawan; and Speaker of the House, Femi Gbajabiamila, read out Buhari’s request to members of their respective chambers and the lawmakers had debated it.
President Buhari had titled the letter, ‘Restructuring of Ways and Means Advances,’ and explained that WMAs by the apex bank to the Federal Government is a funding option that caters for short-term or emergency finance to fund delayed government anticipated cash receipt of fiscal deficit.
Buhari had said that the WMAs balance as of December 19, 2022, is N23,719,703,774,306.90, adding that the N23.7tn loan would be repaid in forty years and that the moratorium on principal repayment is three years while the pricing interest rate is 9 per cent.
However, the House of Representatives during plenary on Tuesday okayed N1tn WMAs after receiving the recommendation by the Joint Committees on Finance; Banking and Currency; and Aids, Loans and Debts Management.
Because the report presented to the House by the Deputy Chairman of the House Committee on Finance, Musa Abdullahi, sought further explanation and convictions from the presidency on N22.7tn loan, the lawmakers rejected Buhari’s request for N22,719,703,774,306.90.
The committee had said it approved the N1tn because of its observations and the exigencies of the Federal Government current fiscal situation,
Similarly, the Senate opposed to Buhari’s request for the loan despite earlier assurances of the President of the Senate, Ahmad Lawan, to Buhari that the Senators would consider it.
Investors King had reported how CBN noted that the Federal Government’s excessive borrowing from the bank’s Ways and Means Advances (W&M) window could frustrate its monetary policy.
The apex bank had said that overdrafts due to the increasing reliance on the WMAs overdrafts would negatively impact its monetary policy.
Notwithstanding, the Federal Government had been running to the WMAs for any sign of budget deficit.