Olayemi Cardoso, the Governor of the Central Bank of Nigeria, announced that the apex bank will cease providing Ways and Means advances to the Federal Government until the outstanding balance is resolved.
The CBN governor made this statement on Friday during an interface with the Senate Committee on Banking, Insurance and Other Financial Institutions alongside Sani Abdullahi, CBN Deputy Governor of Economic Policy; Wale Edun, minister of Finance and coordinating minister for the Economy, Atiku Bagudu, minister of Budget and National Planning, Abubakar Kyari, Minister of Agriculture, and Aliyu Abdullahi, minister of state for agriculture,
Ways and Means is a loan facility through which the Central Bank of Nigeria finances the federal government’s budget shortfalls. In December 2023, the National Assembly approved the securitisation of the outstanding debit balance of N7.3 trillion of the Ways and Means Advance in the Consolidated Revenue Fund, CRF of the Federal Government.
In March 2022, the Debt Management Office (DMO) announced that the federal government had borrowed a total of N18.16 trillion from the Central Bank, which raised public concerns.
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Cardoso insisted that the apex bank would not be a part of the Ways and Means agreement with the federal government again if it failed to refund all the outstanding debts, noting that the action complies with Section 38 of the CBN Act 2007.
“I am pleased to note the Fiscal Authorities efforts in discontinuing ways and means of advances. This is also in compliance with Section 38 of the CBN Act 2007; the Bank is no longer at liberty to grant further ways and means advances to the Federal Government until the outstanding balance as of December 31, 2023, is fully settled. The bank must strictly adhere to the law limiting advances under ways and means to 5 percent of the previous year’s revenue.
The CBN governor noted that the payment of the outstanding balance of the Ways and Means will control inflation in the country.
Cardoso also informed us that the bank has also halted quasi-fiscal measures of over N10 trillion by the apex Bank of Nigeria under the guise of development finance interventions, which have hitherto contributed to flooding excess Naira and raising prices to the levels of inflation we are grappling with today.
He, however, did not state whether the federal government has surpassed the limit of advances according to the CBN Act
“The CBN’s adoption of the inflation-targeting framework involves clear communication and collaboration with fiscal authorities to achieve price stability, potentially leading to lowered policy rates, stimulating investment, and creating job opportunities.
“Our MPC meeting on the 26th and 27th of February is also expected to review the situation and take further decisions on these important issues,” Cardoso said.
