Connect with us

    Hi, what are you looking for?

    E-Financial

    Securitisation of CBN’s N22.7trn advances will reduce FG debt service burden – Expert

    DMO

    A financial expert, Prof. Uche Uwaleke, says the securitisation of the Central Bank of Nigeria (CBN’s) N22.7 trillion Ways and Means Advances will afford the Federal Government a ‘breather’ in terms of debt service burden.

    Uwaleke, a Professor of Capital Market at the Nasarawa State University, Keffi said this in an interview with the News Agency of Nigeria (NAN) on Friday in Abuja.

    According to him, this is in view of the fact that repayment of the over N22 trillion will now be spread over 40 years with a three year grace period on the principal sum.

    “In respect of the securitisation of the Ways and Means, the government debt restructuring arrangement affords it a breather in terms of debt service burden.

    “Similarly, the cost of annual debt service will reduce given the concessional rate of nine per cent as against the current 20.5 per cent interest rate charged on CBN’s Ways and Means.

    “The cumulative effect of these would be a reduction in government budget deficit and freeing up resources that could be applied to more productive areas,” he said.

    Uwaleke said that It was also important to note that since the securities will only be taken up by the CBN and not the public, the fear that it will crowd out the private sector was no longer there.

    “There is equally the issue of debt transparency that it engenders.

    “Before now, CBN’s Ways and Means did not form part of the public debt stock reported by the Debt Management Office.

    “Securitisation would entail including it as part of the country’s public debt which makes for transparency ” he said.

    He said that, henceforth, adequate safeguards should be put in place to ensure that CBN’s Ways and Means were curtailed due to its negative impact on the general price level.

    “The relevant provisions of the CBN Act should clearly stipulate the conditions under which debt limits can be breached.

    “The process should involve approval by the National Assembly as well as stiff sanctions for breach of the limits provided in the Act without following due process.

    The News Agency of Nigeria (NAN) reports that the Ways and Means provision allows the federal government to borrow from the apex bank if it needs short-term or emergency finances.

    This is to enable the government to fund expected cash receipts of fiscal deficits.

    The Nigerian Senate had, on Wednesday, approved the request of President Muhammadu Buhari to restructure the advances through securitisation.

    Based on statutory provisions, however, the approval of the Senate and the House of Representatives are required for securitisation.

    Implementation can, thus, only be upon concurrent approval of the House of Representatives.(NAN)

    Spread the love
    Click to comment

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    ad

    You May Also Like

    Oil and Gas

    Leading oil and gas experts in Nigeria have called for the full adoption of digital technologies to overcome the complex challenges facing the country’s...

    News

    Russia’s Finance Ministry announced on Wednesday, September 24, that it plans to raise the country’s value-added tax (VAT) to help finance the ongoing war...

    Tech

    Lagos State has reaffirmed its position as Africa’s leading technology and innovation hub following the successful hosting of the GITEX Nigeria Tech Expo, Future...

    Tech

    Kashifu Inuwa, Director General of the National Information Technology Development Agency (NITDA), has said Nigeria’s collaboration with the Japan International Cooperation Agency (JICA) is...