Senate Amends CBN Act to Raise Lending Limit to FG

*Extends 2022 supplementary budget implementation by six months

Sunday Aborisade in Abuja

The Senate yesterday held an emergency session and amended the Central Bank of Nigeria (CBN) Act to raise the total advances the apex bank can grant the federal government from five per cent to 15 per cent.
The Red Chamber also passed another bill to extend the implementation of the 2022 supplementary budget by six months from June 30, 2023, to December 31, 2023.

The two bills, which were both read for the first time, were sponsored by the Senate Leader, Senator Abdullahi Ibrahim Gobir (APC, Sokoto East).
They were titled: “A Bill for an Act to Amend the 2022 Supplementary Appropriation Act and for Other Matters Connected therewith, 2023 (SB. 1124)” and “A Bill for an Act to Amend the Central Bank of Nigeria Act C4 Laws of the Federation of Nigeria 2004 and for Other Matters Connected Thereto, 2023 (SB. 1125).”
 While leading the debate on the CBN Amendment Act, the Senate Leader said the Bill seeks to amend the CBN Act regarding the Ways and Means Advances policy.

Under the CBN Act, the Ways and Means provision 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.
According to him, the amendment specifically seeks to increase the total CBN advances to the federal government from five per cent to a maximum of 15 per cent.

Gobir said: “The very essence of this bill is to enable the federal government to meet its immediate and future obligation in the approval of the ways and means by the National Assembly and advances to the federal government by the Central Bank of Nigeria.
“This amendment is very consequential and it needs the support of us all. This is to enable the federal government to embark on very important projects that will inflate and rejig the economy.”

The CBN Act allows the apex bank to grant temporary advances to the federal government in respect of temporary deficit of budget revenue at such rate as the bank may determine.
It, however, stipulates that the total amount of such advances outstanding “shall not at any time exceed five per cent of the previous year’s actual revenue of the federal government.”

In addition, it stipulates that: “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the federal government financial year in which they are granted.

“If such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.
Specifically, Section 38 of the CBN Act states: “Notwithstanding the provisions of section 34(d) of this Act, the Bank (CBN) may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine.

“The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the federal government.”
Leading the debate on the bill to amend the supplementary budget, the Senate Leader said it was necessary to extend the implementation of the budget because some “significant amounts of funds remain with MDAs.”
He explained that the bill which seeks to amend the 2022 Supplementary Appropriation Act would extend the implementation year from June 30, 2023, to December 1, 2023.

The 2022 supplementary budget of N819,536,937,813 was passed last December to finance some unplanned situations that occurred as a result of flooding and other events with a mandate to end the implementation on March 31, 2023.
Gobir recalled that the National Assembly extended the implementation of the 2022 Supplementary Appropriation Act from December 31, 2022, to March 31, 2023.

He said: ” This was to allow full implementation of the budget, especially in light of the 2022 Supplementary budget approved in December 2022.
“The extension had allowed MDAs to utilise a large proportion of funds released to them. However, significant amounts of funds remain with Ministries Department and Agencies (MDAs) and will require a further extension to be fully expended.
“Given the critical importance of some key projects nearing completion, requesting a further extension of the expiration clause in the 2022 Supplementary Appropriation Bill and the Long Title and Explanatory Memorandum is expedient.

“This is to avoid compounding the problem of abandoned projects, given that some of the projects were not provided for in the 2023 Budget,” Gobir explained.
Gobir urged his colleagues to give their full support to the Bill to allow full utilisation of the capital releases to help reflate the economy.
At the emergency plenary, the bills titled “2022 supplementary Appropriation Act (Amendment) Bill, 2023 (SB.1124) and Central Bank of Nigeria (CBN) Act (Amendment) Bill 2023 (SB. 1125)” were read for the first time, and adopted after which they were passed for second and third reading respectively before they were approved.

 The Senate passed the bill after the clause-by-clause consideration at the Committee on Supply.
The Senate President, Dr. Ahmad Lawan, directed the Clerk to the National Assembly to transmit the two bills to the executive arm of government for the president’s assent.