Following the continuous violation of the 5% Ways and Means Advances ceiling stated in the CBN Act, where government advances from CBN have risen to 127.3% of the previous year’s revenue in 2018 and 177.5% in 2019. The House of Representatives has approved an amendment to the CBN Act, raising the ceiling of ways and means advances to 15%. This amendment is coming after the securitization of the N22.7trn Ways and Means to a 40-year bond with a 9% coupon rate, an equal violation of section 38 (b) of the CBN Act. Analysts have previously raised that the securitization of the N22.7trn W&Ms is an incentive for more borrowings from CBN which is detrimental to the economy in terms of the inflationary and exchange volatility effect. This upward adjustment just confirms analysts’ fear that the new administration will continue the hazardous act and resort to warehousing the accumulated W&Ms (securitization), thereby raising the country’s total debts.
