CSO faults amendment of CBN Act, urges President to withhold assent

The Centre for Social Justices (CSJ), a civil society organisation, has faulted the recent amendment of the Central Bank of Nigeria (CBN) Act, increasing overdraft accessible by the Federal Government from five to 15 per cent.

It said the amendment contradicted best practices in fiscal responsibility and it’s an authorisation to the executive to create macroeconomic distortions through arbitrary and increased ways and means of funding.

Lead Director of CSJ, Mr. Eze Onyekpere, in a statement, said the extant section 38 of the CBN Act grants the Federal Government access to ways and means of financing in respect of temporary deficiency of budget revenue at such rate of interest as may be determined by CBN.

“The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of FGN. All Advances made pursuant to this authority shall be repaid – (a) as soon as possible and shall, in any event, be repayable by the end of the Federal Government’s financial year in which they are granted, and if such advances remain unpaid at the end of the year, the power of CBN to grant such further advances in any subsequent years shall not be exercisable, unless the outstanding advances have been repaid.”

Already the Federal Government is indebted to the CBN to the tune of N23.72 trillion resulting from accumulated ways and means facilities. Onyekpere described the amendment passed by the Senate shortly before the recent inauguration as a misconceived route to meeting the needs and obligations of the FG, which cannot be held in fixing the economy.

“It will rather create new macroeconomic challenges. There is evidence that previous advances from the CBN were more than the five per cent rule and instead of reforms to ensure conformity with fit and good practices, leeway is provided for deepening fiscal mischief,” he said.