BY Bunmi Aduloju
The Central Bank of Nigeria (CBN) says it will sustain its ways and means advances to the federal government at a 5 percent limit for the 2024-2025 fiscal year.
Ways and means is a loan facility through which the CBN finances the federal government’s budget shortfalls.
The CBN law stipulates that advances by the apex bank must not surpass 5 percent of the previous year’s revenue of the federal government — but this has been observed only in the breach over the years.
In its monetary, credit, foreign trade, and exchange policy guidelines for the fiscal years 2024-2025, published on Tuesday, the CBN said it would continue to finance the federal government through ways and means.
“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,” the regulator said.
The CBN said 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”.
“Consistent with the banking arrangement of Treasury Single Account (TSA), 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 (CRF) to arrive at the FGN consolidated cash position,” the apex bank said.
On February 9, Olayemi Cardoso, governor of the CBN, had said the financial institution would halt its ways and means advances to the federal government — “until all outstanding debts are refunded”.
The decision was made amid a push by the national assembly to increase the ways and means limit to 10 percent.
In February, a bill seeking to raise ways and means to the federal government from 5 percent to 10 percent passed the second reading at the senate.
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