Tuesday, April 16, 2024
MARKET UPDATE
Advertisement Topt

TheCable

Advertisement lead

N’assembly approves Tinubu’s request to securitise N7.3trn ways and means debt

N’assembly approves Tinubu’s request to securitise N7.3trn ways and means debt
December 30
20:39 2023

The national assembly on Saturday approved President Bola Tinubu’s request for the securitisation of outstanding N7.3 trillion ways and means debt balance.

Ways and Means is a loan facility through which the Central Bank of Nigeria (CBN) provides short-term financing to cover the government’s budget shortfalls.

Also, securitisation is the practice of pooling together various types of debt instruments and selling them as bonds to investors.

Tinubu, had in a letter, addressed to both chambers, made the request.

Advertisement

Both chambers had earlier passed the 2024 appropriation bill, increasing its size from N27.5 trillion proposed by Tinubu to N28.7 trillion.

Subsequently, both chambers, at plenary approved the president’s securitisation request. 

Godswill Akpabio, senate president, read the letter during the plenary.

Advertisement

Addressing the senate, Tinubu cited the provisions of section 38 of the CBN Act 2007, which “stipulates that the apex bank may grant temporary advances to the Federal Government”.

Tinubu said: “In respect of temporary deficiency of budget revenue provided, such overdraft do not surpass five percent of 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 N7.3trillon as at Dec 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.”

Advertisement

According to the president, it is crucial to securitise the outstanding ways and means advance of the federal government before the end of 2023.

He said securitisation will lead to the realisation of some benefits, such as reduction of debt service costs.

Tinubu explained the “interest rate for the securitised ways and means is lowered to nine per cent compared to three per cent previously adopted”.

“The savings arising from the much lower interest rate will help to reduce the deficit in the budget and improvement in debts transparency as securitised ways and means advances are included in the public debts statistics,” he said.

Advertisement

”In view of the forgoing the senate is invited to kindly consider and approve the securitisation of the outsatnding debit balance of N7.3trillion in the same order as at Dec. 2023.”

On May 3, 2023, the senate approved the N22.7 trillion loan request made by former President Muhammadu Buhari.

Advertisement

Click on the link below to join TheCable Channel on WhatsApp for your Breaking News, Business Analysis, Politics, Fact Check, Sports and Entertainment News!

Tags

0 Comments

No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Write a Comment

error: Content is protected from copying.