The House of Representatives in Nigeria has agreed to President Muhammadu Buhari’s controversial overdrafts request from the Central Bank of Nigeria (CBN), despite widespread disapproval at the Senate approval for a restructuring of the N23.7tn loan under the Ways and Means provision.
The W&M provision allows the government to borrow from the apex bank in the short-term or for emergency financing of delayed expected cash receipts from fiscal deficits. The Federal Government has said it will repay the loan, which is now standing at N23.7tn with securities such as treasury bills and bonds issuance.
Last December, Buhari asked both the Senate and the National Assembly to approve his proposal, but the lawmakers failed to consider it during plenary in January. During a Committee of the Whole meeting, the House passed a resolution to approve the securitisation of the total outstanding W&M amount under certain conditions.
Economic expert Adetilewa Adebajo claims that Nigerians are indirectly paying for the extra-budgetary spending through rising inflation. Adebajo suggests that the Federal Government should adopt options within the Debt Management Office (DMO) Act to refinance the N23.7tn of Nigeria’s total debts, instead of securitising it, and to stop financing the country’s debts through Ways and Means, which he described as “illegal”.
The Federal Government had at some point sought to securitise the debts, but economic experts condemned the move as unwise economically. Both the pan-Yoruba socio-political organisation Afenifere and the National Association of Nigerian Students (NANS) Zone D, together with a lecturer at Babcock University, Ilisan-Remo, Ogun State, Dr Yinka Akintunde, have criticised Buhari for flouting Section 38 of the CBN Act by obtaining overdraft and advances via W&M from the apex bank to the tune of N23.7tn.