Failure to Securitise CBN Overdrafts Will Cost Nigeria Extra

By Adedapo Adesanya

President Muhammadu Buhari has warned that the Nigerian government might have to pay N1.8 trillion extra interest this year if the National Assembly fails to approve his request to swap the Ways and Means of the Central Bank of Nigeria (CBN) with bonds.

Mr Buhari said this on Tuesday when he signed the 2023 Appropriation Bill into law in the presence of a few key members of the parliament at the Presidential Villa.

In December, the Senate delayed a decision on the president’s request to convert the N23.7 trillion CBN overdrafts to the government into 40-year bonds after some lawmakers questioned the proposal.

In his speech on Tuesday, Mr Buhari said the government currently pays a 3 per cent margin above the central bank’s lending rate of 16.5 per cent, but his administration has negotiated a rate of 9 per cent for the bonds.

“I have no intention to fetter the right of the National Assembly to interrogate the composition of this balance, which can still be done even after granting the requested approval.

“Failure to grant the securitization approval will, however, cost the Nigerian government about N1.8 trillion in additional interest in 2023, given the differential between the applicable interest rates, which is currently MPR plus 3 per cent, and the negotiated interest rate of 9 per cent and a 40-year repayment period on the securitised debt of the Ways and Means,” he said

The National Assembly increased the size of the 2023 budget by 6.4 per cent to N21.83 trillion.

“Considering the imminent transition process … I decided to sign the 2023 appropriation bill into law … to enable its implementation to commence without delay,” the president said, referring to a general election coming up in February.

“To ensure more effective implementation of the 2022 capital Budget, we proposed, and the National Assembly approved, an extension of its validity date to 31st March 2023. I would like to appreciate the cooperation of the National Assembly on this,” he added.

Having completed the maximum two terms allowed by the constitution, President Buhari will be leaving power, opening the berth open for heavyweights including Mr Bola Ahmed Tinubu of the All Progressives Congress (APC), Mr Atiku Abubakar of the Peoples Democratic Party (PDP), Mr Peter Obi of the Labour Party (LP), and Mr Rabiu Kwakwanso of the New Nigeria People’s Party (NNPP).

Rising debt, weak economic growth, high inflation, and mounting insecurity are major issues for many Nigerian voters.