ASSETS & FINANCIALS

Reps ignore outrage, okay Buhari’s N23.7tr extra-budgetary spending

Reps ignore outrage, okay Buhari’s N23.7tr extra-budgetary spending

• Adebajo: Nigerians indirectly paying for CBN’s unregulated lending to FG through high inflation
• Don’t destroy Nigeria before you leave, Afenifere, NANS, don tell Buhari, NASS

Despite outrage at Wednesday’s Senate approval of President Muhammadu Buhari’s request to restructure the N23.7 trillion loan from the Central Bank of Nigeria (CBN) extended to the Federal Government under its Ways and Means (W&M) provision, the House of Representatives, yesterday, assented to the president’s controversial CBN overdrafts.

The W&M 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.

Recall that the Federal Government had said it would repay the loan, which as at December 2022 stood at N23.7 trillion with securities such as treasury bills and bonds issuance.

Buhari, had in December 2022, asked both chambers of the National Assembly to approve his proposal, but the lawmakers who had promised to consider the request before proceeding for the election break, failed to list it for consideration during plenary in January.

However, presenting the report at the Committee of the Whole yesterday, the House passed a resolution to approve same: “Approve the securitisation of the total outstanding W&M amount under the following terms: amount N23,719,703,774,306.90; Tenor 40 years; Moratorium on Principal Repayment three years; Pricing/Interest Rate nine per cent per annum.”

The report presented by three committees of finance, banking and currency, loans and aid management stood in the name of the chairman, committee on finance, James Faleke.

Similarly, at plenary, the ad-hoc committees in charge of investigating the volume of fuel consumed daily, and state of refineries, laid its findings and recommendations for consideration.

The committees, respectively chaired by Abdulkadir Abdullahi and Ganiyu Johnson, presented their various reports.
The Deputy Speaker, Idris Wase, who presided over the plenary, directed the clerk to make copies of the reports available for consideration on Tuesday.

Nigerians are indirectly paying the N23.7 trillion extra-budgetary spending, an economist, Adetilewa Adebajo, has said. According to him, citizens are paying the loan through raging inflation.

Adebajo, the chief executive officer of CFG Advisory, said the lending had been pushing up Nigeria’s inflation rate and making the cost of lending to banks go higher.

The economist, while discussing the economic challenges before the incoming administration of Bola Tinubu on Arise Television, stressed the importance of institutional reforms of the CBN, Ministry of Finance and the Ministry of Industry, Trade and Investment to drive economic growth.

He said: “There has to be alignment of monetary and fiscal policies. Lack of it was the greatest undoing of the current administration.

“Right now, the economy is not attracting enough capital inflow because of how poorly it has been managed. There is an under-performance of capacity even when Nigeria remains Africa’s largest economy.”

On the danger the Federal Government’s massive borrowings from CBN constitutes to the economy, Adebajo maintained that the inability to repay was responsible for rising inflation, rising cost of borrowing, and crowding out of the private sector from business.

The Federal government had at some point sought to securitise the debts, but economic experts condemned the move as unwise economically.

Adebajo advised the Federal government to adopt options within the Debt Management Office (DMO) Act to refinance N23.7 trillion of Nigeria’s total debts, instead of securitising it.

He proposed a resolution trust, a special purpose vehicle (SPV) backed by legislation within the current DMO Act and framework for refinancing of the nation’s burgeoning debts, as against securitising the ways and means of debt financing on the CBN balance sheet.

He suggested that the Federal government should, as a matter of urgency, stop financing the country’s debts through ways and means, which he described as “illegal.”

In separate reactions, the pan-Yoruba socio-political organisation, Afenifere; National Association of Nigerian Students (NANS), Zone D and a lecturer at Babcock University, Ilisan-Remo, Ogun State, Dr. Yinka Akintunde, yesterday, berated 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 N23.7 trillion.

Afenifere, through its National Publicity Secretary, Jare Ajayi, and the Coordinator of NANS Southwest Zone D, Emmanuel Olatunji also chided the National Assembly for the laxity and abdication of its oversight functions.

When contacted, Ajayi expressed shock at the level of government’s violation of the relevant law as well as the gargantuan sum borrowed all through the tenure of the outgoing Buhari administration.

Ajayi submitted that although the law of the land allows the government to borrow money from the Central Bank of Nigeria (CBN), “but it must be for a short while – just to bridge ‘temporary deficiency’ as clearly in Section 38 of the CBN Act, 2007”
He went further to add that the same section also makes it mandatory for the government to repay such a loan with interest.

“It is curious that for seven good years, the government had engaged in borrowing such humongous amounts without paying interest let alone the principal. Instead, it was accumulating the debts alongside the ones being borrowed from outside sources.

“The National Assembly cannot pretend not to know what was going on. Apart from the fact that the issue features often on the paper of the CBN, the government, in October 2022, announced its desire to ‘restructure its record N20 trillion debt of the Central Bank bonds’. That ought to have served as a wake-up call for the Legislative Arm. Going by the penchant of the Buhari administration to keep borrowing both from within and from without, one is tempted to wonder what the relevant Committees (in charge of the CBN etc) of the National Assembly have been doing.”

He added that this near N23.7 trillion loan repayable in 40 years – long after this administration, in fact this generation – would have gone; including the recent $800 million loan from the World Bank, portray the outgoing government of President Buhari as the most debt-piling, if not the most profligate, administration in Nigeria’s history”.

He regretted that the socio-economic situation on ground, including the high cost of living in the land does not justify the unprecedented loans.

He concluded by saying that it is not too late to rein in this penchant for accumulating debts. “No more approval should be given. Too much burden is being prepared for the incoming administration and those that will follow. It is unfortunate.”

Olatunji said: ‘’This is not actually the time to be seeking for such when the administration is already winding down even though the funds had been received through W&M advances. However, it’s more terrible because the funds had been spent without any impact on the economy.

The populace is even poorer and the inflation rate still remains at double digits.”
The NANS Coordinator said: “It is very wrong. He is handing over in less than a month. Buhari should concentrate on handing over to the incoming government. Is he not tired of borrowing? Does he want to sell Nigeria as a country before he leaves? He should just pack his load and leave Nigeria’s treasury’’

mms plus

Copyright MMS Plus. All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from Kings Communications Limited.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
× Get News Alert