The Central Bank of Nigeria (CBN) sustained its Ways and Means Advances to the Federal Government at a 5% limit for the fiscal years 2024-2025.
The monetary policy rate 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 guidelines aligned with the Medium Term Expenditure Framework (MTEF), under which the apex bank is to manage expectations, implement time-consistent policies, address shocks to support the ongoing recovery, and ensure the country’s macroeconomic stability.
The Guidelines posted on the CBN website 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.
“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 added.
The apex bank’s policy stance came despite the recent passage of a Bill by the National Assembly, Nigeria’s apex bank, which raised the Ways and Means maximum borrowing percentage from 5% to 10% .
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 CBN may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate of interest as the bank may determine.
It would be recalled that last year, there was serious controversy concerning the amount approved by the apex bank to the government during the former CBN governor’s, Godwin Emefiele’s, tenure without approval from the National Assembly.
It was allegedly then that the apex bank printed the sum of N22.7 trillion for former President Muhammadu Buhari under Ways and Means.
At a Senate Committee meeting in February 2024, Olayemi Cardoso maintained that the apex bank would no longer give Ways and Means to the Federal Government until the previous loans were repaid, stressing that the decision is one of the measures taken by the apex bank to address the surging inflation rate and other micro and macroeconomic challenges in the political economy.
