Debt: Tinubu Urged to Reject CBN Act Amendment on Lending Limit

Patrick OdeyMay 31, 2023

2 minutes read

The Centre for Social Justice (CSJ) has called on President Bola Ahmed Tinubu to withhold his assent to the recent amendment to the Central Bank of Nigeria (CBN) Act by the National Assembly.

The amendment, which was passed by the Senate and the House of Representatives in an emergency session on Saturday and Sunday respectively, seeks to increase the total advances the CBN can grant to the federal government from five per cent to 15 per cent of the previous year’s revenue.

The CSJ, in a statement issued on Monday by its Lead Director, Eze Onyekpere and Program Manager, Public Finance Management, Sundayson Chidi, condemned the amendment as a violation of fiscal responsibility and an authorization of the executive to create macroeconomic distortions through arbitrary and increased ways and means funding.

The CSJ said the amendment contradicts the provisions of the Fiscal Responsibility Act, which limits borrowing from the CBN to short-term or emergency financing of temporary revenue shortfalls.

The CSJ also said the amendment undermines the independence and autonomy of the CBN as a monetary authority and exposes it to political interference and manipulation.

The CSJ questioned the rationale behind the amendment, noting that the federal government has not been able to repay previous advances from the CBN at five per cent of previous year’s revenue.

The CSJ said that previous high levels of advances led the executive to incur over N23 trillion in ways and means which could not be repaid and had to be converted by the National Assembly to long term indebtedness contrary to the provisions of the CBN Act.

The CSJ said that resorting to ways and means funding to finance budget deficits will further increase inflation, which is already at 22.2 per cent as of April 2021, and erode the value of the naira and real income.

The CSJ said that the amendment of the CBN Act did not follow due process, as it was arbitrary and lacking in popular participation. The CSJ said there was no opportunity for a public hearing and publicity, to give room for Nigerians to make inputs on this very crucial matter with potentials to negatively affect overall economic growth and general welfare of the people.

The CSJ appealed to President Tinubu to withhold his assent to the bill and engage in dialogue with relevant stakeholders before taking any decision on this matter.

The CSJ acknowledged the revenue challenges facing the nation but said that implementing this bill will create monumental macroeconomic challenges now and in the future.