CBN Defies N’Assembly, Maintains 5% Ways And Means

The Central Bank of Nigeria has confirmed that it will sustain its Ways and Means Advances to the federal government at a 5 per cent limit for the fiscal years 2024-2025.

This is contrary to a bill passed by the National Assembly which raised the maximum borrowing percentage in the Act from five per cent to ten per cent.

The bank in the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the Fiscal Years 2024-2025, it published on Tuesday, shared the information.

The guideline aligns with the MTFF, under which the CBN will manage expectations, implement time-consistent policies, address shocks to support the ongoing recovery, and ensure the country’s macroeconomic stability.

The document 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.”

The apex bank added that the 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.

“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 noted.

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.

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According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government with regards to temporary deficiency of budget revenue at such rate of interest as the bank may determine.