The Senate on Wednesday passed a bill to increase the percentage of Ways and Means loans the Central Bank of Nigeria (CBN) can provide to the Federal Government.
The upper chamber raised the credit facility limit from the apex bank from 5% to 10%, allowing the Federal Government to access more funds for budget shortfalls.
Known as the Ways and Means, the CBN offers short-term financing to the Federal Government to cover its budget deficits.
To facilitate this, the Senate amended the CBN Act, effectively doubling the allowable CBN advances (loans) to the Federal Government, as reported by Channels Television.
The bill for the amendment of the CBN Act was considered during the plenary session on Wednesday, when it was read for the first time.
Senate Leader Opeyemi Bamidele explained that the executive bill, read for the first time on Wednesday, aims to enable the Federal Government to meet its immediate and future obligations due to increasing needs for funds to finance budget deficits and other expenses.
He highlighted that the loans would provide immediate funds to address budget shortfalls, finance essential government expenditures, and maintain financial market stability by preventing government default on its obligations.
Bamidele stated, “The loans, when injected into the economy, will stimulate economic activity, potentially create jobs, and enable the government to support critical sectors like agriculture, healthcare, and infrastructural development.”
He also noted that the loans would lower the government’s borrowing costs by providing cheaper funds compared to traditional borrowing methods.
Bamidele and his colleagues argued for increasing the margin from 5% to 10%, emphasizing the necessity for economic development.
They stressed the importance of adequate monitoring of capital projects to ensure that the funds are used solely for infrastructure and legacy projects.
After consideration in the Committee of the Whole, the executive bill passed its third reading and was approved by the Senate.
President Bola Tinubu is expected to sign the amended bill into law.
