The Center for Social Justice (CSJ) has urged President Bola Tinubu not to sign the recent amendment to the Central Bank of Nigeria (CBN) Act, which increased advances the CBN can grant to the Federal Government of Nigeria from 5% to 15%.
According to the Centre, the amendment should not be signed because the amendment contradicts best practices in fiscal responsibility and is an authorization of the Executive to create macroeconomic distortions through arbitrary and increased ways and means funding.
Citing the extant Section 38 of the CBN Act, which grants FGN access to ways and means financing in respect of temporary deficiency of budget revenue at such rate of interest as may be determined by CBN, CSJ said the total amount of such advances outstanding shall not at any time exceed 5% of the previous year’s actual revenue of FGN.
The Centre in a statement signed by its Lead Director, Eze Onyekpere, highlighted some of the issues of concern over the amendment. It said:
The Center added that the option of resorting to ways and means to fund budgetary deficits would further increase the already high inflation rate especially when done by printing money not backed by value. Thus, it erodes the value of the Naira, and real income; it reduces purchasing power of citizens.
The Nigerian Senate had in an emergency plenary session on Saturday, May 27, 2023, amended the CBN Act to increase the total CBN advances (Ways and Means provision) to the Federal Government from 5% to a maximum of 15%.
The Senate Leader, Abdullahi Gobir, who read the lead debate on the bill, said the proposed amendment was 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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