THE Central Bank of Nigeria (CBN) governor, Olayemi Cardoso, has said the apex bank would no longer grant ways and means advances to the Federal Government unless the outstanding balance is settled.
Cardoso said this on Friday, February 9, during an interface with the Senate Committee on Banking, Insurance and Other Financial Institutions.
He was accompanied by Sani Abdullahi, CBN Deputy Governor; 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.
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In March 2022, the Debt Management Office (DMO) announced that the Federal Government had borrowed N18.16 trillion from the Central Bank, raising public concerns.
The ICIR recently reported how the overlending with the Federal Government was putting inflationary pressure on the economy and violating the Fiscal Responsibility Act.
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 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 five per cent of the previous year’s revenue.
The CBN governor noted that the payment of the outstanding balance of the ways and means would control inflation in the country.
Cardoso also informed that the Bank had halted quasi-fiscal measures of over N10 trillion by the CBN under the guise of development finance interventions, which hitherto contributed to flooding excess naira and raising prices to the inflation levels the nation currently grapples with.
He, however, did not state whether the Federal Government had 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.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.