Analysts and market players have warned of impending doom with the recent approval of N22,72 trillion Ways and Means ( W&M) loan from the Central Bank of Nigeria (CBN).
analysts say the move is capable of not only making the naira weak, but will impose galloping inflation. According to them. in more practical terms, it means printing of money to run a government.
The Senate however complied and approved the conversion to a 40-year bond of the N23.72 trillion Federal Government’s unappropriated expenditure funded by the Central Bank of Nigeria (CBN) through its Ways and Means Window.
The implication is that the debt will take 40 years to be repaid by another generation to come.
Part of their fears is premised on the fact that Nigeria has already crossed the sacred burrowing limit pf five per cent of previous revenue allowed by law.
And the fears are about violation of the CBN Act and the alarming growth.
According to Section 38 of the CBN Act, “the Central Bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine”.
But the issue is that, “the total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government. All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid”.
Chuks Umegbu, a former banker told Blueprint that when government resort to this method of raising over draft or loan, it then means that the level of productivity is at lowest ebb.
He reflects that, crude oil, the country’s main source of revenue is at its lowest state, with Nigeria being unable to meet its quota for some time. Umegbu regrets that, Nigeria could not even make good money when crude oil prices were high at the International market.
