JUST IN: CBN defies National Assembly, maintains 5% Ways And Means advance limit

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September 17, 2024 3:42 pm

The Central Bank of Nigeria (CBN) has decided to maintain its limit on Ways and Means Advances to the federal government at 5 per cent for the fiscal years 2024-2025, despite a recent bill passed by the National Assembly that proposed increasing this limit to 10 per cent.

Ways and Means Advances are short-term loan facilities provided by the CBN to finance government budgetary shortfalls. The loans are subject to legal limits to prevent excessive borrowing.

A report titled ‘Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the Fiscal Years 2024-2025,’ released by the CBN on Tuesday, confirmed that the guideline aligns with the Medium-Term Fiscal Framework (MTFF).

This framework aims to manage expectations, implement consistent policies, address economic shocks, and maintain macroeconomic stability.

In February 2024, during a Senate Committee meeting, CBN Governor Olayemi Cardoso stated that the apex bank would cease providing new Ways and Means Advances until existing loans were repaid. This measure was introduced to address the country’s economic challenges.

The latest CBN document reiterated that “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 report also mentioned that advances will now be calculated after recognising the sub-accounts of various ministries, departments, and agencies (MDAs) that are linked to the Consolidated Revenue Fund, to determine the Federal Government’s consolidated cash position.

This approach will continue into the 2024/2025 fiscal years, in line with the Treasury Single Account arrangement.

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