BREAKING: CBN Defies National Assembly, Maintains 5% Ways And Means Advance Limit

Nigeria's apex bank, the Central Bank of Nigeria, has affirmed that it will sustain its Ways and Means Advances to the federal government at a 5 per cent limit for the fiscal years 2024-2025.

The latest development is contrary to a bill passed by the National Assembly which raised the maximum borrowing percentage in the Act from five per cent to ten per cent.

This information is based on the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the Fiscal Years 2024-2025, published by the apex bank on Tuesday.

The guideline aligns with the MTFF, under which the CBN will manage expectations, implement time-consistent policies, address shocks to support the ongoing recovery, and ensure the country’s macroeconomic stability.

The document stated, “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.”

The CBN added that the advances would now be determined after recognising the sub-accounts of the various MDAs, which are now linked to the Consolidated Revenue Fund to arrive at the FGN consolidated cash position.

“Consistent with the banking arrangement of Treasury Single Account, Ways and Means Advances would now be determined after recognising the sub-accounts of the various MDAs, which are now linked to the Consolidated Revenue Fund to arrive at the FGN consolidated cash position. This would continue in the 2024/2025 fiscal years,” It noted.

The Ways and Means Advances are loan facilities used by the CBN to finance the government during periods of temporary budget shortfalls and are subject to limits imposed by law.

According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government with regards to temporary deficiency of budget revenue at such rate of interest as the bank may determine.

In 2023, there was serious controversy concerning the amount approved by the Central Bank to the government. The former CBN governor, Godwin Emefiele, without approval from the National Assembly, allegedly printed the sum of N22.7tn for former President Muhammadu Buhari under Ways and Means.

Experts believe the large amount contributes to the high inflation rate and increased money circulation in the economy.

At a Senate Committee meeting in February 2024, the CBN Governor, Olayemi Cardoso, said that the apex bank will no longer give Ways and Means to the Federal Government until the previous loans are repaid.

Olayemi noted that it was one of the measures taken by the apex bank to curtail the economic country currently plaguing the country.

More details soon…