Exactly one week after it approved a whopping N22.7trillion ways and means loan, borrowed from the Central Bank of Nigeria (CBN), President Muhammadu Buhari returned to the Senate on Wednesday, this time seeking for approval of a fresh $800million loan.
A lot of dusts had been raised by stakeholders, who carpeted the ease with which the President’s request sailed through the Red Chambers of the National Assembly, with many analyst, calling it an illegal act for the lawmakers to give official seal to the indiscriminate Ways and Means, which 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, despite a provision in the law that put a ceiling to it.
Regardless, the President, who is currently in the UK attending to his teeth, in a letter read by Senate President Ahmad Lawan at plenary, said the loan, which would be sourced through the World Bank, would be utilised to scale up the National Social Safety Net Programme.
The Senate, had last year thrown out the President’s request to securitise the loan when the proposal was brought by the President, citing a lack of details, but a further pressure was mounted when it was again re-presented, with Buhari appealing to the lawmakers to to reconsider its stand, as failure to grant the approval would cost the government about N1.8tn in additional interest in 2023.
The Senate Leader, Ibrahim Gobir, who led the Senate in the debate for the approval of the Ways and Means on Wednesday, explained that part of the money was given as loans to states.
Gobir added that the Special Committee set up by the Red Chamber to scrutinise the fiscal document, put up the report after ‘critical analysis and review of submissions made by the Federal Ministry of Finance, Budget, and National Planning; and the CBN
The Senate Leader said the panel discovered that the Ways and Means balance was initially N19. 3tn (N19.326,745,239,660.20) as of June 30, 2022 but later grew to N22.7tn (N22,719,704,774,306.90 ) as of December 19, 2022 as a result of financial obligations to ongoing capital projects and additional expenditures which includes domestic debt service gaps and interest rate.
He noted that the Senate on Wednesday, December 28, 2022, approved the sum of N819,536,937,813 from the N1tn additional request made by the president leaving an outstanding balance of N180.4bn being the accrued interest on the sum.
Gobir further stated that the House of Representatives had earlier approved the additional N1tn Ways and Means Advances requested by the President to enable the smooth implementation of the supplementary budget.
Gobir said, “Part of the Ways and Means monies were given to State Governments as loans to augment budgetary shortfall in their various States.
“Most of the requests for funds for an increase in Ways and Means were made to Mr President on the need to finance the budget due to revenue shortfall. Such requests were either made by the Hon. Minister of Finance, Budget and National Planning or the Central Bank Governor.
“The Federal Government as a result of revenue shortfalls occasioned by the COVID-19 pandemic and low oil prices, relied heavily on the Ways and Means to finance its budget deficit to keep the country working for the people.”
The Senate leader added, “The monies received by the Federal Government were actually used for funding critical projects across the country.
“That due to the serious shortfall in Government Revenue, the Federal Government in order for the economy not to collapse, was compelled to borrow repeatedly from the CBN, exceeding the 5 per cent threshold of the prior year’s revenue as stipulated by the CBN Act, 2007.
“That the Federal Government through the Ministry of Finance, Budget, and National Planning has concluded plans to convert the CBN loans to tradable securities such as treasury bills and bond issuance.”
Gobir said the Senate Special Committee after exhaustive deliberations, recommended among others, the restructuring of N22.7tn for Ways and Means Advances be approved because the advances were made to ensure that the government does not shut down.
The panel further sought the approval of the Senate for the sum of N180.4bn being the balance of the supplementary budget and the interest accrued on the Ways and Mean Advances.
Other recommendations were, “If there is a need to exceed the five per cent threshold of the prior year’s revenue, recourse must be made to the National Assembly for approval.
“The Federal Government should begin the process of recovering the portion of the Ways and Means given as the loans to State Governments as further deferment of the repayment of the loans by the States will not be healthy for the economy.
“The Federal Government through the Ministry of Finance, Budget and National Planning should expedite action on the repayment of the loans through treasury bills and bond issuances.
“The National Assembly will not condone future increases in the Ways and Means without seeking the approval of the National Assembly.”
Meanwhile, the Senate President, Ahmad Lawan, after the approval of the fiscal document, noted that the Ways and Means Advances was a global practice.
He, however, faulted the process adopted by the executive arm of government which failed to carry the National Assembly along while accumulating a huge amount of loans.
Lawan added that the Senate had to pass the Ways and Means Advances so that the federal parliament would be able to consider and pass the 2022 Supplementary Budget still pending before the two chambers.