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NASS grants the President of Nigeria, Bola Ahmed Tinubu the approval for the securitization of the N7.3 trillion he has previously requested
The National Assembly has granted approval for the securitization of the remaining debit balance of N7.3 trillion in the Ways and Means Advance within the Consolidated Revenue Fund (CRF) of the Federal Government.
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This decision comes after considering President Bola’s letter, urgently addressed to the presiding officers of the National Assembly, and was subsequently approved during plenary.
Ways and Means serves as a loan facility through which the Central Bank of Nigeria (CBN) finances budget shortfalls for the government. President Tinubu’s letter, titled “Securitization of the debit balance of Ways and Means in the consolidated Revenue Fund of the Federal Government of Nigeria,” highlighted Section 38 of the existing CBN Act 2007, allowing temporary advances to the Federal Government for budget revenue shortfalls, not exceeding 5% of the previous year’s revenue.
The letter emphasized that, as of December 11, 2023, the Consolidated Revenue Fund (CRF) account of the Federal Government stood at N7.3 trillion due to domestic debt servicing, including principal and interest. While the government explores measures to prevent reliance on Ways and Means advances for domestic debt servicing, President Tinubu stressed the urgency of securitizing the outstanding balance before the year-end.
The securitization of Ways and Means is expected to yield several benefits, including a reduction in debt service costs, with the interest rate lowered to 9% per annum compared to the previous 0.3% Monetary Policy Rate (MBR). This reduction is anticipated to contribute to lowering the budget deficit.
President Tinubu highlighted the improvement in debt transparency, as securitized Ways and Means Advances will be included in public debt statistics. Consequently, the Senate is urged to consider and approve the securitization of the outstanding debit balance of N7.3 trillion as of December 2023.
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