The Nigerian Senate has passed a bill to increase the percentage of loans the Central Bank of Nigeria can give to the Federal Government.
The upper chamber raised the credit facility from 5% to 10%.
The bill was passed on Wednesday and amends the CBN Act to allow the apex bank to provide more short-term financing to the government. This type of loan, known as Ways and Means, helps cover budget shortfalls.
Senate Leader Opeyemi Bamidele explained that the increase is meant to help the government meet its immediate and future financial needs. He said, “The executive bill is to enable the Federal Government to meet its immediate and future obligations due to the government’s increasing needs for funds to finance the budget deficits and other expenses.”
Bamidele added that the increased loans will help address budget shortfalls and finance essential government activities. He noted, “The loans will enable the provision of immediate funds to address budget shortfalls and finance essential government expenditures as well as help maintain financial market stability by preventing government default on its obligation.”
According to Bamidele, the increased funds will stimulate economic activity, potentially create jobs, and support critical sectors like agriculture, healthcare, and infrastructure. He also mentioned that the loans will be cheaper than traditional borrowing methods, lowering the government’s borrowing costs.
The Senate debated the increase and agreed that it should be raised from 5% to 10%. They also emphasized the need for proper monitoring of capital projects to ensure that the funds are used for infrastructure and legacy projects.
After a thorough review, the bill passed its third reading and is now awaiting President Bola Tinubu’s signature to become law.
