JUST IN: CBN Upholds 5% Ways And Means Limit, Rejecting National Assembly’s Suggestion

JUST IN: CBN Upholds 5% Ways And Means Limit, Rejecting National Assembly’s Suggestion

The Central Bank of Nigeria (CBN) has announced that it will retain the 5% limit on Ways and Means Advances to the federal government for the 2024-2025 fiscal years, despite a recent National Assembly bill proposing an increase to 10%. This decision is detailed in the CBN’s Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the 2024-2025 period, released on Tuesday……CONTINUE READING 

The guidelines emphasize maintaining macroeconomic stability in line with the Medium-Term Fiscal Framework (MTFF), aiming to manage expectations, respond to economic shocks, and sustain economic recovery. The document states: “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% of the previous year’s actual collected revenue. These advances shall be repaid as soon as possible, and in any case, within the year they are granted.”

The advances will now be calculated after considering the sub-accounts of various Ministries, Departments, and Agencies (MDAs) linked to the Consolidated Revenue Fund to determine the government’s overall cash position. Ways and Means Advances, short-term loans from the CBN to cover budget shortfalls, are capped under Section 38 of the CBN Act of 2007 at a percentage of the previous year’s revenue and must be repaid within the same fiscal year.

In recent years, the use of these advances has been controversial, especially in 2023, when former CBN Governor Godwin Emefiele was accused of printing ₦22.7 trillion for the government without National Assembly approval. Critics claim that excessive reliance on this facility has contributed to inflation and increased the money supply. In February 2024, current CBN Governor Olayemi Cardoso informed the Senate Committee that the CBN would cease further advances until existing loans were repaid.

This decision is part of the CBN’s broader efforts to address Nigeria’s economic challenges.