Despite National Assembly Bill, CBN Maintains 5% Cap On Ways And Means Advances

Despite National Assembly Bill, CBN Maintains 5% Cap On Ways And Means Advances

The Central Bank of Nigeria has maintained its Ways and Means Advances to the federal government at a 5 per cent limit for the fiscal years 2024-2025, despite 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 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.

A report titled ‘Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the Fiscal Years 2024-2025, published by the apex bank on Tuesday’, said the guideline aligns with the MTFF.

Under the MTFF CBN will manage expectations, implement time-consistent policies, address shocks to support the ongoing recovery, and ensure the country’s macroeconomic stability.

At a Senate Committee meeting in February 2024, the CBN Governor, Olayemi Cardoso, said that the apex bank will no longer give Ways and Means to the Federal Government until the previous loans are repaid.

Olayemi noted that it was one of the measures taken by the apex bank to curtail the economic country currently plaguing the country.

However, the latest CBN 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.”

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, the report added.

“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.