November 12, (THEWILL) – In a curious twist of events, the Federal Government has asked the Central Bank of Nigeria (CBN) for a loan of around N1.7 trillion to help it fund the 2023 supplementary budget, two sources familiar with the development told THEWILL on Thursday and Friday.
President Bola Tinubu signed the N2.17 trillion supplementary budget into law on November 8, 2023.
THEWILL gathered that the Ways and Means advance request has thrown the Governor of the Central Bank, Olayemi Cardoso, into a dilemma due to the controversies surrounding the previous loans granted to the Federal Government by the apex bank during the presidency of Muhammadu Buhari, which stood at about N22.7 trillion on May 29, 2023, when the administration ended.
Ways and Means is a short-term or emergency loan provision that allows the government to borrow from the CBN to meet budget shortfalls.
The six-month-old Bola Tinubu Administration has introduced reforms it hopes will help spur productivity and improve government receipts.
One of the sources, asking to be anonymous, said the request for the loan was made by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun.
When THEWILL contacted Mr Edun for clarification and clarity on the development, he said the CBN was in a better position to respond to questions on the matter, adding that he is abroad and may not be fully up to speed on developments.
CBN’s Director of Corporate Communications, Dr. Isa Abdulmumin, was unavailable for comments on the subject.
The Tinubu administration’s request for a N2.18 trillion supplementary budget has generated a lot of controversy across the states.
Well-meaning Nigerians are worried that the items presented in the budget do not pose any urgency to warrant the huge sum of money being expended on the supplementary spending plan.
They further observed that the luxury items for which President Tinubu wants to commit huge resources at these austere times, when the government is going cap in hand borrowing, is contrary to any iota of reason.
While Nigerians have not complained about aspects of this supplementary budget that would be of benefit to the citizens such as infrastructure and defence , the areas relating to luxury items, are considered totally reprehensible.
These include the proposed request for N4 billion for the renovation of the residential quarters for the President in Abuja; renovation of the residential quarters of the Vice President (Abuja) – N2.5 billion; renovation of Dodan Barracks, Lagos, official residence of the President – N4 billion; renovation of official quarters of the VP (Lagos) – N3 billion; construction of office complex in the Presidential Villa – N4 billion; purchase of presidential yacht – N5 billion; purchase of vehicles for the Office of First Lady – N1.5 billion; purchase of SUVs for the Presidential Villa – N2.9 billion; and replacement of operational vehicles for the Presidency – N2.9 billion.
As observed by some well-meaning Nigerians, these details that constitute waste, luxury and greed, have sparked outrage in an understandable sense.
While undergoing screening at the Senate in September, Cardoso said CBN will be repositioned to grow the size of the Nigerian economy to an ambitious value of $1 trillion in Gross Domestic Product (GDP) in the next eight years.
He also vowed to embrace a culture of compliance and internal control of commercial banks, halt the continuous fall of the Naira in the foreign exchange market and tackle the rising inflation rate.
Cardoso emphasised the need to restore the apex bank’s independence and credibility by refocusing on its core mandate and ensuring a culture of compliance.
“Much has been made of past CBN forays into development financing such that the lines between monetary policy and fiscal intervention have become blurred.
“In refocusing CBN to its core mandate, there is a need to pull the CBN back from direct development finance interventions into more limited advisory roles that support economic growth.”
Nigeria’s inflation surged to 26.72 per cent last month, 0.92 basis points higher than the 25.80 per cent recorded in the previous month. The increase reflects the impact of the removal of petrol subsidy and the devaluation of the official exchange rate on consumer prices, particularly food.
On addressing the rising inflation, Cardoso noted that the new CBN leadership would “adopt an evidence-based monetary policy and shall not be making decisions based on a whim.”
Cardoso said there are short, medium and long-term measures to address the worrisome foreign exchange rate, dimension of inflation and deficit financing.
He said there is a need to have a stable exchange rate if Nigeria must be prosperous, adding that the measures will include economic diversification, and operations such as ensuring rules that are open and transparent for foreign direct investment.
“There are two very important issues that we would have to address. It is an operational issue. Right now, you have a situation about the figures. We are aware of unsettled obligations by the CBN. The immediate priority is to verify the authenticity and extent of what it holds; once we do that we need to promptly find a way to take care of that.
“It will be naive for us to expect that we will be making too much progress if we are not able to handle that side of the foreign exchange market. We cannot reasonably expect serious foreign direct investors or portfolio investors and now we are talking about short-term terms in place.
“We cannot expect that those players who generally have an impact on our market will do so if we do not have an open and transparent system that everybody understands and can rely on, not subject to review without any notice,” he said.
A top bank executive who would not want his name published told THEWILL that if the Tinubu-led government has resorted to ways and means at this early stage, the CBN governor should be ready to suffer Godwin Emefiele’s fate because it is the President that calls the shots.
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