Senate passes bill to raise CBN’s maximum advances to Federal Government to 15 percent

*The Nigerian Senate, at an emergency plenary session held Friday, May 26, passed a bill to amend the Central Bank of Nigeria Act to increase CBN’s advances to the Federal Government from 5 percent to 15 percent towards enabling the government to embark ‘very important projects that will inflate and rejig the economy’

Alexander Davis | ConsumerConnect

The Senate, in the National Assembly (NASS) Friday, May 26, 2023, in  Abuja, FCT, held an emergency plenary session to pass a bill to amend the Central Bank of Nigeria (CBN) Act to increase the total CBN advances to the Federal Government from five per cent (5 percent) to a Maximum of fifteen per cent (15 percent).

ConsumerConnect reports set aside its Standing Orders 2022 (as amended ) to hold an emergency plenary session for the amendment of CBN) Act.

The amendment followed the presentation of Senator Ibrahim Abdullahi Gobir (Sokoto East), Senate Leader, and subsequent and consideration of the CBN Act (Amendment) Bill, 2023 (SB. 1125).

The bill, which was read the third time and passed at the plenary was read for the first time on Wednesday, May 24 this year had sought to amend the CBN Act to increase the total CBN advances to Federal Government from five per cent to a maximum of 15 percent.

Objective of CBN Act (Amendment) Bill 2023

Leading a debate on the General principles of the CBN Act (Amendment) Bill, 2023 (SB. 1125) earlier, Senator Gobir, explained that the proposed amendment would enable the Nigerian Government to meet its immediate and future obligation in the approval of the ‘Ways and Means’ by the National Assembly and advances to the Federal Government by the CBN.

The Federal lawmaker said: “Mr. President, my respected colleagues, permit me to lead the debate on this Bill, which seeks to amend the Central Bank of Nigeria (CBN) Act to increase the total CBN advances to the Federal Government from five percent (5%) to a Maximum of fifteen percent (15%).

“The Bill was read for the first time in this Chamber on Wednesday, 24th May, 2023.”

He also stated: “The very essence of this Bill, my respected colleagues, is to enable the Federal Government meet its immediate and future in the approval of the ways and means by the National Assembly and advances to the Federal Government by the Central Bank of Nigeria.”

Gobir added: “This amendment is very consequential and it needs the support of us all.

“This is to enable the Federal Government to embark on very important projects that will inflate and rejig the economy.”

On extant CBN Act

The CBN Act stipulates the banking sector regulator may grant temporary advances to the Federal Government in respect of temporary deficit of budget revenue at such rate as the bank may determine.

The Act, however, provides the total amount of such advances outstanding “shall not at any time exceed five (5) percent of the previous year’s actual revenue of the Federal Government.”

It further states that, “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.”

Besides, Section 38 of the CBN Act specifically notes: “Notwithstanding the provisions of section 34(d) of this Act, the Bank (CBN) may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine.

The total amount of such advances outstanding shall not at any time exceed five percent of the previous year’s actual revenue of the Federal Government.

If such advances remain unpaid at the end of the year, the power of the CBN to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid, stated the Act.

According to the provision,  “the very essence of this bill is to enable the Federal Government to meet its immediate and future obligation in the approval of the ways and means by the National Assembly.

“And advances to the federal government by the Central Bank of Nigeria.”

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