The Senate on Saturday approved the securitisation of the outstanding debit balance of N7.3 trillion of the Ways and Means Advance in the Consolidated Revenue Fund (CRF) of the Federal Government.
The Senate President, Godswill Akpabio, announced the approval after majority of the lawmakers supported it through a voice vote during the plenary.
Ways and means is a loan facility through which the Central Bank of Nigeria finances the government’s budget shortfalls.
The securitisation is the process of pooling assets and repackaging them into interest-bearing securities.
President Bola Tinubu, in a letter read by Mr Akpabio during the plenary, requested the approval.
“I will like to call the attention of the Senate to the provisions of section 38 of the subsisting CBN Act 2007.
“It stipulates that the apex bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue provided such overdraft do not surpass 5% of the Government revenue from the Previous year.
“The senate is invited to note that from available information by the CBN the Consolidated Revenue Fund (CRF) account of the Federal Government of Nigeria (FGN) stood at N7.3trn as at December 11, 2023 that is due to domestic debt servicing, Principal and interest,” the president said.
The senate president immediately referred the request to the Committee on Supply for consideration and approval, stating that it was urgent.
The committee, thereafter, deliberated and approved the request.
Read President Tinubu’s letter below:
“I will like to call the attention of the Senate to the provisions of section 38 of the subsisting CBN Act 2007.
“It stipulates that the apex bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue provided such overdraft do not surpass 5% of the Government revenue from the Previous year.
“The senate is invited to note that from available information by the CBN the Consolidated Revenue Fund (CRF) account of the Federal Government of Nigeria (FGN) stood at N7.3trn as at December 11, 2023 that is due to domestic debt servicing, Principal and interest.
“While the Federal Government is considering various measures to forestall the use of Ways and Means advances for domestic debt servicing, it has become highly imperative to securitirise the outstanding Ways and Means Advance of the Federal Government of Nigeria before the end of the year 2023.
“The securitisation of the Ways and Means will lead to the realization of the following benefits amongst others:
“Reduction of debt service costs as interest rate for the securitize Ways and Means advanced is lowered at 9% per annum compared to MBR which is 0.3%
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“The savings arising from the much lower interest rate will have to reduce the deficit in the budget.
“The improvement in debts transparency as securitised Ways and Means Advances are included in the public debts statistics.
“In view of the forgoing the senate is invited to kindly consider and approve the securitisation of the outstanding debit balance of N7.3tr in the same order as at December 2023”.
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