A bill seeking to increase the percentage of Ways and Means loans the Central Bank of Nigeria (CBN) can extend to the federal government has been passed by the Nigerian Senate.

The bill, which amends the CBN Act to raise the limit on advances (loans) from the apex bank to the federal government, was read for the first time and passed during a plenary session in the upper chamber on Wednesday.

According to the passed bill, the credit facility available to the federal government from the CBN will increase from five to ten per cent, helping to cover budget shortfalls.

Senate leader Opeyemi Bamidele explained that the bill aims to help the government meet its immediate and future financial obligations, particularly as the need for funds to finance budget deficits and other expenses continues to grow.

Mr Bamidele also stated that the loans would support essential government expenditures, stabilise the financial market by preventing government default, and stimulate economic activity by creating jobs.

Additionally, he noted that the bill would allow the government to support critical sectors such as agriculture and healthcare and provide infrastructural development while reducing borrowing costs by offering cheaper funds than traditional borrowing methods.

While agreeing that the increase is necessary for economic development, some lawmakers argued for adequate monitoring of capital projects to ensure judicious use of the funds for infrastructure and legacy projects.

The executive bill subsequently passed its third reading and was approved after consideration by the Committee of the Whole.