Senate sets aside rules, holds emergency Plenary Session to amend CBN Act

• New Act  increases  the total CBN advances to FG from 5% to a Maximum of 15% 

By Henry Umoru, ABUJA

The Senate has set aside its Standing Orders 2022 as amended to hold an emergency plenary session over the amendment of the Central Bank of Nigeria (CBN) Act, 2004.

At the emergency plenary session yesterday, the Senate passed a bill to amend the Central Bank of Nigeria (CBN) Act to increase the total CBN advances to the Federal Government from five per cent (5%) to a Maximum of fifteen per cent (15%).

The amendment was a sequel to the presentation and consideration of the CBN Act( Amendment)Bill, 2023( SB. 1125  by the Senate Leader, Senator  Ibrahim Abdullahi Gobir, APC, Sokoto East.

The bill which was read the third time and passed was read for the first time on Wednesday, May 24. seeks to amend the CBN Act to increase the total CBN advances to Federal Government from five per cent to a maximum of 15 per cent.

The CBN Act says the CBN may grant temporary advances to the federal government in respect of temporary deficit of budget revenue at such rate as the bank may determine. It, however, says the total amount of such advances outstanding “shall not at any time exceed five (5) per cent of the previous year’s actual revenue of the Federal Government.”

In addition, it stipulates that, “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.”

Section 38 of the CBN Act states: “Notwithstanding the provisions of section 34(d) of this Act, the Bank (CBN) may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine. 

The total amount of such advances outstanding shall not at any time exceed five (5) percent of the previous year’s actual revenue of the Federal Government.

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.

Specifically, Section 38 of the CBN Act states: “Notwithstanding the provisions of section 34(d) of this Act, the Bank (CBN) may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine. 

“The total amount of such advances outstanding shall not at any time exceed five (5) per cent of the previous year’s actual revenue of the Federal Government.”

“The very essence of this bill is to enable the federal government to meet its immediate and future obligation in the approval of the ways and means by the National Assembly. And advances to the federal government by the Central Bank of Nigeria.

Earlier in his lead debate on the General principles of the CBN Act( Amendment)Bill, 2023( SB. 1125), Senator Gobir, APC, Sokoto East said that the proposed amendment would enable the Federal Government to meet its immediate and future obligation in the approval of the Ways and Means by the National Assembly and advances to the Federal Government by the Central Bank of Nigeria.

Gobir said. “Mr. President, my respected colleagues, permit me to lead the debate on this Bill which seeks to amend the Central Bank of Nigeria (CBN) Act to increase the total CBN advances to the Federal Government from five per cent (5%) to a Maximum of fifteen per cent (15%). 

“The Bill was read for the first time in this Chamber on Wednesday, 24th May, – 2023. 

“The very essence of this Bill my respected colleagues is to enable the federal __ Government meet its immediate and future obligation in the approval of the ways and means by the National Assembly and advances to the Federal Government by the Central Bank of Nigeria.

“This amendment is very consequential and it needs the support of us all. This is to enable the Federal Government to embark on very important projects that will inflate and rejig the economy.