On Wednesday, the Nigerian Senate passed a bill to increase the percentage of Ways and Means loans that the Central Bank of Nigeria (CBN) can provide to the Federal Government. The new legislation raises the credit facility limit from 5% to 10%.
The Ways and Means loans are short-term financing solutions offered by the CBN to address budget shortfalls for the Federal Government. The Senate amended the CBN Act to accommodate this increase in available loans.
The bill, which was read for the first time during Wednesday’s plenary session, aims to help the Federal Government meet its immediate and future financial obligations, given its growing need for funds to cover budget deficits and other expenses.
Senate Leader Opeyemi Bamidele explained that the increased loans would provide immediate funding to address budget gaps, support essential expenditures, and help stabilize financial markets by preventing government defaults. The funds are also expected to stimulate economic activity, create jobs, and support critical sectors such as agriculture, healthcare, and infrastructure.
Bamidele noted that the increased loan limits would offer cheaper funds compared to traditional borrowing methods. He and his colleagues argued for the increase to be raised to 10%, emphasizing that while the increase was necessary for economic development, it was crucial to enhance monitoring of capital projects to ensure funds are directed solely towards infrastructure and legacy projects.
After consideration by the Committee of the Whole, the bill passed its third reading and is now awaiting President Bola Tinubu’s signature to become law.