On Wednesday, the Nigerian Senate passed a bill to increase the percentage of Ways and Means loans the Central Bank of Nigeria (CBN) can provide to the Federal Government, raising the limit from 5% to 10%.
The Ways and Means facility is a short-term financing mechanism through which the CBN offers loans to the Federal Government to cover budget shortfalls. The Senate’s decision involved amending the CBN Act to allow for a higher total of advances.
Senate Leader Opeyemi Bamidele explained that the executive bill, read for the first time on Wednesday, aims to help the Federal Government meet its immediate and future financial obligations. This need arises from increasing demands for funds to address budget deficits and other expenditures.
Bamidele highlighted that the additional funds would help address budget shortfalls, finance essential government expenditures, and maintain financial market stability by preventing government defaults on obligations.
He further noted that these loans, when injected into the economy, could stimulate economic activity, create jobs, and support critical sectors such as agriculture, healthcare, and infrastructure development.
He also pointed out that these loans would provide cheaper funding than traditional borrowing methods, thus lowering the government’s borrowing costs.
The bill, after consideration in the Committee of the Whole, passed its third reading and was approved. President Bola Tinubu is expected to sign the amended bill into law, formalizing the new loan limits and enabling the Federal Government to better finance its budget and projects.
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