The Senate has amended the Central Bank of Nigeria (CBN) act — increasing the “ways and means borrowing” threshold for the federal government.
During an emergency session held on Saturday, the senate raised the limit from a 5 percent threshold to a maximum of 15 percent that the government can get from the CBN.
Ways and means is a loan facility through which the CBN finances the government’s budget shortfalls.
The facility allows the government to borrow from the apex bank if it needs short-term or emergency finance to fund important projects.
A lot of economists have opined that is an endorsement of fiscal recklessness as this measure will provide a free reign of impunity.Hitherto the limit was set at 5%, Section 38 of the CBN act, 2007, stipulates that the total amount of ways and means advances outstanding shall not at any time exceed 5 percent of the previous year’s actual revenue of the federal government.
