Nigeria to spend next 40 years repaying controversial N23.72tr CBN overdrafts to FG
The Senate, yesterday, abandoned its previous hard line stance and approved the conversion to a 40-year bond of the N23.72 trillion Federal Government’s unappropriated expenditure funded by the Central Bank of Nigeria (CBN) through its ways and means (W&M) window.
NaijaNews reports that President Muhammadu Buhari, last year, wrote the National Assembly to approve the amount alongside a fresh N1 trillion it planned to take from the window (bringing the total value earmarked for securitisation to N23.72 trillion) for conversion to a 40-year tenure bond priced at nine per cent.
The bond conversion, which would ultimately move the amount from the balance sheet of the CBN to the Debt Management Office (DMO) for management, has a three-year moratorium, the Buhari administration disclosed.
The Senate and the House of Representatives had at several times turned down approval for lack of proper explanation on how proceeds of the loans would be spent.
With the Senate’s approval, the President’s efforts to push through has now narrowed to the House of Representatives, which had rejected the plea for lack of sufficient explanation of the utilisation of the facility. Sources said the Reps might discuss the request for possible approval when they convene next week.
The lower chamber would have approved the fresh additional borrowing of N1 trillion before proceeding on election recess but held back its approval for the restructuring of the controversial N22.72 trillion, seeking further explanation on the accumulation.
When the lower chamber of the National Assembly approves the request, the amount would be moved from the CBN book where it is currently being serviced at 21 per cent interest. The Federal Government said it agreed to an interest rate payment of the going monetary policy rate (MPR) plus 300 basis points (bps) as the price of the loan. MPR is currently 18 per cent with the possibility of a further upward review.
Buhari hinted late last year that the Federal Government would spend an additional N1.8 trillion servicing the debt except it is converted to a sovereign bond priced at nine per cent. The Guardian had reported that with the current interest of 21 per cent, the government could spend as much as N4.6 trillion as the cost of yearly servicing.
If the President secures consolidated approval in the coming weeks, the current cost of the loan would come down by as much as 57 per cent. But that depends on if the nine per cent negotiated bond price subsists as the cost of commercial debt has increased in the past months.
The approval could open a floodgate of litigation over the legality of the accumulated W&M advanced ab initio. When the Buhari administration assumed office, CBN’s overdraft to the government stood at N789.7 billion. The amount has since 2015 ballooned by 2,902 per cent to its current value (N23.72 trillion).
But the controversy is more about its alleged violation of the CBN Act than the alarming growth. According to Section 38 of the CBN Act, “the Central Bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine.”
But it adds: “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. 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 and 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.”
Yesterday, a renowned monetary policy expert and professor of applied economics, Godwin Owoh, said Senate’s approval amounts to illegality that would be challenged by the court by interested Nigerians.
Describing the legislative action as approval in arrears, he said the National Assembly should have focused on interrogating how the proceeds of the loans, which were not appropriated.
The administration relied on the window to cater to short-term or emergency needs and fund delayed expected cash receipts.
Adopting the report of its special committee on W&M advances, which considered the request of the President on the issue, the Senate said the restructuring was approved because the advances were made to ensure that the government did not shut down.
The Senate further approved the sum of N180.46 billion being the balance of the supplementary budget and the interest accrued on the W&M advances.
The upper legislative chamber warned that subsequently “if there is a need to exceed the five per cent threshold of the prior year’s revenue, recourse must be made to the National Assembly for approval.”
On states, whose budget shortfalls were also funded through the CBN lending window, the Senate advised: “The Federal Government should begin the process of recovering the portion of the W&M given as loans to state governments as further deferment of the repayment of the loans by the states will not be healthy for the economy.”
It also urged the government to expedite action on the repayment of the loans through treasury bills and bond issuance, saying it will not condone future accumulation without recourse to the National Assembly.
Presenting the report of the special committee, its Chairman and Senate Majority Leader, Ibrahim Abdullahi Gobir, said the committee found out that “part of the monies were given to state governments as loans to augment budgetary shortfalls in their various states”.
“Most of the requests for funds for an increase in W&M were made to Mr. President on the need to finance the budget due to revenue shortfall. Such requests were either made by the Minister of Finance, Budget and National Planning or the CBN Governor.
“The Federal Government as a result of revenue shortfalls occasioned by the COVID-19 pandemic and low oil prices relied heavily on the W&M to finance its budget deficit to keep the country working for the people. The monies received by the Federal Government were actually used for funding critical projects across the country.
“Due to the serious shortfall in Government Revenue, the Federal Government for the economy not to collapse, was compelled to borrow repeatedly from the CBN, exceeding the five per cent threshold of the prior year’s revenue as stipulated by the CBN Act,” the report stated.
The report further disclosed, “the Federal Government through the Ministry of Finance, Budget, and National Planning has concluded plans to convert the CBN loans to tradable securities such as treasury bills and bond issuance”.
Mobilising his colleagues for the rejection of the President’s request earlier, Senator George Thompson Sekibo explained that the advances were illegal and unconstitutional. He informed the Senate that the action of the President was in breach of the CBN Act and the Senate standing rules.
“We should be abreast with the information that such money was going to be taken because it was being taken on behalf of the people of Nigeria and we are entrusted with the power to make laws. They brought this without details for us to approve,” the Senator said.
But the Senate President, Ahmed Lawan, attempted severally to get the Senate to accede to the president’s request – a plea that hit the rock.
Just In! Sam Larry In Police Custody Over Mohbad’s Death
In a surprise development, Naijanewsngr reports that socialite Sam Larry is under police custody in connection with the tragic death of artist Mohbad.
The Lagos Police Command confirmed the arrest and reported Sam Larry’s cooperation with their investigation.
The circumstances surrounding Mohbad’s death remain unclear, causing a stir in the entertainment world. Updates are eagerly awaited as authorities continue their inquiry.
Stay tuned for more details as the investigation progresses.
Govt, Labour Congress meeting ends in deadlock.
Govt, Labour Congress meeting ends in deadlock.
Details of the meeting between the Federal Government and the Nigeria Labour Congress (NLC) have emerged.
The meeting ended in a deadlock on Monday.
The Minister of Labour and Employment, Simon Lalong, called the meeting, which failed to address any of the issues raised by the Union.
However, the minister expressed optimism that the issues raised by the Nigerian workers would be addressed.
He said the FG would resolve the issues before the deadline.
“We must also recognize the economic realities that confront us.
“As we address the concerns of our workforce, we must be mindful of striking a balance that promotes economic growth and secures sustainable progress for our nation.
“Today, I call upon each one of you to join hands in an open-minded and constructive dialogue, enabling us to bridge any gaps that may exist between the interests of workers and the ultimate goal of driving economic advancement,” he said.
NLC President Ajaero said: “In the ultimatum we gave and in the NEC resolution, the issue of NURTW was clearly stated, and at the time, the issue had not degenerated the way it is now. That was why we had to bring it along.
“On the other issues, you can see that there was no agreement on any; there is no CNG anywhere, and refineries are not working, nor gas.
“Nothing has been done on the issue of wage awards, cash transfers, or the ASUU issues. However, we believe that between now and the next few days, when the ultimatum expires, something will happen.”
Ajaero said there was no going back on the planned indefinite strike if no progress was made before the expiration of the union’s ultimatum.
Breaking News: Dramatic Rescue as Fire Engulfs Lekki Shanty
In a heart-wrenching incident that unfolded earlier today, a shanty settlement in the upscale area of Lekki, Lagos, was engulfed in flames, leaving residents scrambling for safety and hope.
The fire, a relentless force of destruction, threatened to consume everything in its path, but amidst the chaos and despair, two lives were miraculously saved.
The Lekki shanty, like many informal settlements around the world, was a tightly-knit community where people, despite facing severe economic hardships, found a sense of belonging and resilience. However, this morning, their lives took an abrupt turn as plumes of thick, acrid smoke filled the sky, darkening the once-vibrant neighborhood.
The response from local authorities and good Samaritans was swift. Firefighters from the Lagos State Fire Service rushed to the scene, battling against the raging inferno.
Their courage and determination were on full display as they fought valiantly to contain the blaze and prevent it from spreading further.
As they worked tirelessly, the streets echoed with the panicked cries and prayers of those who had lost everything.
Amidst the chaos, the heroism of two individuals shone brightly. Mr. Ade, a middle-aged resident of the shanty, emerged as a true savior.
Risking his own life, he braved the flames to rescue his neighbors trapped in their burning homes. With unwavering resolve, he helped carry an elderly woman and a young child to safety, earning the gratitude and admiration of the entire community.
The rescued woman, Mrs. Okonkwo, spoke tearfully of her harrowing experience. She expressed her gratitude to Mr. Ade and the firefighters who had come to their rescue. Her story serves as a poignant reminder of the strength and resilience of ordinary people in the face of adversity.
As the hours passed, the firefighters’ efforts finally paid off, and the flames were brought under control. While the shanty had suffered extensive damage, the worst had been averted.
Thanks to the rapid response of the authorities and the bravery of Mr. Ade, the community had not suffered any casualties, save for the trauma of witnessing their homes reduced to ashes.
The aftermath of this devastating fire serves as a sobering reminder of the vulnerabilities faced by informal settlements and marginalized communities. It underscores the urgent need for improved safety measures and infrastructure in such areas to prevent such disasters in the future.
In the midst of tragedy, the resilience and heroism displayed by the residents of the Lekki shanty, as well as the valiant efforts of the firefighters, provide a glimmer of hope.
It is a testament to the strength of the human spirit and the power of unity in the face of adversity.
While the road to recovery will be long and challenging, the Lekki community will undoubtedly emerge stronger, their bonds forged even tighter in the crucible of this fiery trial.
Just In! Sam Larry In Police Custody Over Mohbad’s Death
AKMODEL Homes And Properties To Launch Mega Double Estate
Mohbad Gave His Life For Others To Rise – Favour Benson
Ex-FIRS Chairman, Muhammad Nami In Hot Soup Over Approval Of N11 Billion Suspicious Payment After His Sack
Access Bank Establishes Dedicated Desk to Enhance Agric Lending
WEMA BANK, SELAR PARTNER TO EMPOWER AFRICA’S CREATOR ECONOMY WITH A WEBINAR ON “THE DIGITAL ECONOMY AND THE FUTURE OF WORK”
Lagos Governorship Tribunal Prepares for Verdict with Heightened Security Measures
Pochettino Reflects on Chelsea’s Early Season Challenges: A Call for Maturation
UBA IS HEADLINE SPONSOR OF LAGOS INTERNATIONAL TRADE FAIR 2023, PARTNERS LCCI TO BOOST SMALL BUSINESSES IN AFRICA
Tony Ejiogu to REBUILD Imo State- See Full Video
News11 months ago
What Led Us To Choose Peter Obi As Our Candidate?-Middlebelt Forum
News12 months ago
Happy 62nd Anniversary of Nigeria’s Independence!
News5 months ago
“New King of Serie A,” Tinubu hails Osimhen on winning the Serie A Title
News7 months ago
David Alaba racially abused online after voting for Lionel Messi over his Real Madrid team-mate Karim Benzema at the FIFA Best awards
Politics7 months ago
Labour Party Wins Enugu Polls
News7 months ago
Ivorian Defender Moustapha Sylla Dies At 21
News8 months ago
Naija News: CBN Extends Deadline For Use Of Old Naira Notes
News5 months ago
BREAKING: Nigerian Chef Hilda Baci Sets A New Guinness World Record For The Longest Cooking Marathon