- Stakeholders Want Independent Body to Monitor Policy
By Isaac Akerele
Nigeria’s Central Bank Chief, Olayemi Cardoso on Friday said that the Federal Government will lose access to critical budget funding loans henceforth until it’s towering N18 trillion debt is repaid
As a result, the bank will no longer provide statutorily-limited “Ways and Means Advances” to finance fiscal deficits until the outstanding balance is settled. He said
The Announcement came as Cardoso testified before a joint National Assembly committee probing the crippling exchange rate gaps and inflation in the Nation
“I am pleased to note the Fiscal Authorities efforts in discontinuing Ways and Means Advances. This is also in compliance with section (38) of the CBN Act (2007).
“The Bank is no longer at liberty to grant further Ways and Means Advances to the Federal Government until the outstanding balance as of December 31, 2023, is fully settled.
“The Bank must strictly adhere to the law limiting advances under Ways and Means to five percent of the previous year’s revenue,” he declared.
Ways and Means Advances is a loan facility the Central Bank of Nigeria use to finance the Federal government’s budget deficits.
In December 2023, the National Assembly approved the securitization of the Federal Government’s N7.3 trillion outstanding balance of Ways and Means Advances against the Consolidated Revenue Fund (CRF).
Earlier in March 2022, the Debt Management Office (DMO) had announced that the Federal Government’s total debt owed to the Central Bank amounted to N18.16 trillion.
At that time, the Federal Government’s accumulated debt owed to the Central Bank represented over 40 percent of the entire money supply existing in the Nigerian economy.
Cardoso provided no details on the current debt level. Yet he doubled down that there will be no further advancing until the government repays all outstanding sums.
CBN also eases budget shortfalls amid revenue constraints. Losing access to the funds would cause a devastating cash crunch and inhibit basic governance operations.
The move forms part of the bank’s larger effort to curb excessive spending that floods the economy with excess liquidity and has “contributed to the rising prices and inflation we are grappling with” Cardoso explained.
He noted the bank additionally halted over N10 trillion spent under its development finance interventions using “quasi-fiscal measures.”
However, some economists and stakeholders have advocated an independent body to hold Cardoso accountable for his words and inaction. According to them, it’s not enough to simply groubstand” there must be a system to monitor the policy.”
With Nigeria facing economic downturn, Cardoso further warned that exchange rate and inflation risks requires urgent mitigation from both the fiscal and monetary sides.
