CBN Shuns NASS’ Bill, Keeps 5% Ways And Means Advance Limit

Despite a bill passed by the National Assembly raising the maximum borrowing percentage in the Act from five per cent to 10 per cent, the Central Bank of Nigeria (CBN) is maintaining it’s existing Ways and Means Advances limit to the Federal Government.

Accordingly, the apex Bank has decided to keep the five (5) per cent limit for the 2024-2025 fiscal years.

The Ways and Means Advances are loan facilities deployed by the CBN to fund the government during periods of temporary budget shortfalls and are subject to limits set by law.

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

Under the MTFF, which is formulated to “attain short-term macro-fiscal stability while remaining supportive of the recovery and to promote fiscal sustainability”, CBN will manage expectations, implement time-consistent policies, address shocks to support the ongoing recovery, and ensure the country’s macroeconomic stability.

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

He stated that it was one of the measures taken by the apex bank to curtail the economic crisis currently plaguing the country.

But the latest CBN document highlighted the situation thus; “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.”

Also, the report further submitted that “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”

The report maintained that; “This would continue in the 2024/2025 fiscal years”.