THE Central Bank of Nigeria (CBN) has insisted it would retain the five per cent ways and means advances to the Federal government despite the recent passage of a bill by the National Assembly that raised it to 10 per cent.

This was contained in the ‘Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2024-2025 document’ released by the CBN on Tuesday, September 17.

“Ways and Means Advances shall continue to be available to the Federal Government to finance deficits in its budgetary operations to a maximum of 5.0 per cent of the previous year’s actual collected revenue.

“Such advances shall be liquidated as soon as possible and shall in any event be repayable at the end of the year in which it was granted,” it stated.

Consistent with the banking arrangement of the Treasury Single Account (TSA), CBN said the advances would now be determined after recognising the sub-accounts of the various ministries, departments and agencies (MDAs) of the government.

It noted that the MDA’s accounts have now been linked to the Consolidated Revenue Fund (CRF) to arrive at the FGN consolidated cash position.

“This would continue in the 2024/2025 fiscal years,” the apex bank added.

This came six weeks after the National Assembly considered ‘A Bill for an Act to amend the Central Bank of Nigeria Act, 2007 to increase the Central Bank of Nigeria’s total advance to the Federal Government from five per cent to a maximum of 15 per cent and for other related matters.’

The chambers passed a bill on Wednesday, July 31 and raised the credit facility from five per cent to 10 per cent, doubling the percentage.

When the motion came up at the Upper Chamber, the leader of the Senate, Opeyemi Bamidele, claimed the executive bill was to enable the Federal government meet its immediate and future obligations, owing to its increasing needs for funds to finance the country’s budget deficits.

At the Lower Chamber when the bill was introduced, it witnessed a rowdy session, The ICIR can recall.

At the Lower Chamber, despite majority of the lawmakers voting against raising it to 10 per cent after a rowdy scene, the Deputy Speaker, Benjamin Kalu who presided over the plenary session, overruled in favour of the ayes.

Industry experts have expressed worries over the President Bola Tinubu-led administration’s consideration to utilise the ways and means advances to address revenue shortfalls, warning the approach could exacerbate Nigeria’s cost-of-living crisis, and increase the nation’s debt burden.

The ICIR  recently reported how the overlending with the Federal Government was putting inflationary pressure on the economy and violating the Fiscal Responsibility Act.

The CBN governor, Olayemi Cardoso, had insisted the apex bank would not be a part of the ways and means agreement with the Federal government again if the latter failed to refund all its outstanding debts, citing section (38) of the CBN Act (2007).

In December 2023, the Senate approved the securitisation of N7.3 trillion in ways and means in the Consolidated Revenue Fund sought by President Bola Tinubu.

In May 2023, the Senate also approved the securitisation of N22.7 trillion loans the CBN extended to the federal government under its ways and means provision which the latter under the administration of former President Muhammadu Buhari requested for a restructuring of the loan.