The Federal Government has disregarded the Central Bank of Nigeria Act (2007) as it moves to restructure its estimated $25.6 billion (an equivalent of N9.7 trillion) overdrafts with the monetary authority into a 30-year debt.
The amount, which sources said is unverifiable and could have been discounted following the high level of secrecy around the processes leading to the loans, consists of the existing short-term advances granted by the apex bank.
Government may have, by the facility restructuring, heeded the warning by International Monetary Fund (IMF) and Fitch that the mounting overdrafts were responsible for the accelerating inflation, which hit 16.47 per cent in January.
Like its procurement process, the planned loan liquidation faces major legal hurdles, among which is the CBN Act 2007 that spells out how advances extended to government should be treated as well as repayment processes.
Section 38 of the Act stipulates that the apex bank “may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue.” It, however, restricts the amount to five per cent of the previous “year’s actual revenue of the Federal Government.”