By Business A.M.
The Centre for Social Justices (CSJ) has urged President Bola Tinubu to withhold accent to the recent amendment to the CBN Act by the National Assembly,increasing advances the CBN can grant to the federal government from five percent to 15 percent.
Eze Onyekpere, the lead director of the foremost non-governmental institution focused on public finance in Nigeria, made the call in a statement obtained by Business A.M.
According to Onyekpere, the amendment contradicts best practices in fiscal responsibility and is an authorization of the executive to create macroeconomic distortions through arbitrary and increased ways and means funding.
“We recall that the extant S.38 of the CBN Act grants FGN access to ways and means financing in respect of temporary deficiency of budget revenue at such rate of interest as may be determined by CBN.
“If FGN has not been able to refund previous advances from the CBN at 5 percent of previous year’s revenue, what machinery did the amendment put in place to ensure that FGN will be in a position to repay 15 percent of previous years revenue by the end of its financial year?” he said.
The lead director also recalled that previous high levels of advances led the executive to incur over N23 trillion in ways and means which could not be repaid and had to be converted by the National Assembly to long term indebtedness contrary to the provisions of the CBN Act.
He further noted that the option of resorting to ways and means to fund budgetary deficits increases the already high inflation rate especially when done by printing money not backed by value. This, he explained, erodes the value of the naira, and real income and also reduces purchasing power of citizens.
The organisation said that amendment of the CBN Act did not follow due process as it was arbitrary and lacking in popular participation. It also pointed out that there was no opportunity of a public hearing and publicity, to give room for Nigerians to make inputs on the very crucial matter with potential to negatively affect overall economic growth and general welfare of the people.
“In the light of the foregoing, CSJ strongly appeals to President Bola Ahmed Tinubu to withhold assent to the bill. CSJ acknowledges the revenue challenges facing the nation but the implementation of this particular bill (if it becomes law) will create monumental macroeconomic challenges now and in the future,” it stated.
