The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has announced that the bank will no longer provide Ways and Means advances to the federal government unless the outstanding balance is settled. This decision comes amidst efforts to address the country’s rising inflation, which has led to a significant increase in the prices of goods and services.
Governor Cardoso made this disclosure on Friday during a meeting with the Senate Committee on Banking, Insurance, and other Financial Institutions. He was joined by the Minister of Finance and Coordinating Minister for the Economy, Olawale Edun, the Minister of Budget and National Planning, Atiku Bagudu, and the Minister of Agriculture, Abubakar Kyari.
Ways and Means is a loan facility through which the Central Bank of Nigeria finances the federal government’s budget shortfalls. Last December, 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.
However, Governor Cardoso emphasized that the central bank will not participate in the Ways and Means agreement with the federal government unless all outstanding debts are refunded. This decision is in line with section 38 of the CBN Act (2007), which limits advances under Ways and Means to 5 per cent of the previous year’s revenue.
Mr Cardoso also highlighted the bank’s efforts to halt quasi-fiscal measures of over 10 trillion naira by the Central Bank of Nigeria, which had contributed to excess Naira flooding the market and driving up prices. The CBN’s adoption of an inflation-targeting framework aims to achieve price stability and potentially lower policy rates to stimulate investment and create job opportunities.
The governor stated that the Monetary Policy Committee (MPC) meeting scheduled for February 26th and 27th will review the situation and make further decisions. He expects inflationary pressures to decline in 2024 due to the CBN’s inflation-targeting policy, targeting a reduction in inflation to 21.4 per cent in the medium term, aided by improved agricultural productivity and easing global supply chain pressures.
Premium Times