The Central Bank of Nigeria (CBN) says it will sustain its ways and means advances to the federal government at a 5 percent limit for the 2024-2025 fiscal year.
Ways and means is a loan facility through which the CBN
finances the federal government’s budget shortfalls.
The CBN law stipulates that advances by the apex bank must
not surpass 5 percent of the previous year’s revenue of the federal government
— but this has been observed only in the breach over the years.
In its monetary, credit, foreign trade, and exchange policy
guidelines for the fiscal years 2024-2025, published on Tuesday, the CBN said
it would continue to finance the federal government through ways and means.
“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,” the
regulator said.
The CBN said 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 (TSA), 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 (CRF) to arrive at the FGN consolidated cash
position,” the apex bank said.
On February 9, Olayemi Cardoso, governor of the CBN, had
said the financial institution would halt its ways and means advances to the
federal government — “until all outstanding debts are refunded”.
The decision was made amid a push by the national assembly
to increase the ways and means limit to 10 percent.
In February, a bill seeking to raise ways and means to the
federal government from 5 percent to 10 percent passed the second reading at
the senate.
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