The Senate passed a bill on Wednesday to increase the percentage of Ways and Means loans that the Central Bank of Nigeria (CBN) can provide to the Federal Government.
This legislative move raises the credit facility from the apex bank from 5% to 10%.The Ways and Means loans are short-term financing options that the CBN offers to the Federal Government to cover budget shortfalls.
To facilitate this change, the Senate amended the CBN Act to increase the total advances (loans) that the CBN can give to the Federal Government.
The bill for the amendment of the CBN Act was considered at the plenary session on Wednesday, where it was read for the first time.
Senate Leader Opeyemi Bamidele stated that the executive bill is designed to enable the Federal Government to meet its immediate and future obligations due to the increasing need for funds to finance budget deficits and other expenses.
He explained that the loans would provide immediate funds to address budget shortfalls, finance essential government expenditures, and help maintain financial market stability by preventing the government from defaulting on its obligations.
Bamidele noted 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.
Additionally, he mentioned that the loans would reduce the government’s borrowing costs by providing cheaper funds compared to traditional borrowing methods.
Bamidele and his colleagues argued for raising the margin from 5% to 10%, emphasizing that while the increase is necessary for economic development, there should be enhanced monitoring of capital projects to ensure the funds are used solely for infrastructure and legacy projects.
After being considered in the Committee of the Whole, the executive bill passed its third reading and was approved.
