The Central Bank of Nigeria (CBN) has maintained its 5% limit on Ways and Means Advances to the Federal Government for the fiscal years 2024-2025, despite a bill passed by the National Assembly raising the maximum borrowing percentage from 5% to 10%, Okay.ng reports.
The Ways and Means Advances are short-term loan facilities provided by the CBN to finance the government’s budget shortfalls, subject to legal limits. These advances allow the government to manage temporary cash flow issues but are capped to prevent excessive borrowing.
According to the CBN’s latest report, titled ‘Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the Fiscal Years 2024-2025’, the decision to maintain the 5% limit aligns with the Medium-Term Fiscal Framework (MTFF). The guideline ensures that the CBN can manage expectations, implement consistent policies, address economic shocks, and support macroeconomic stability during Nigeria’s ongoing recovery.
At a Senate Committee meeting in February 2024, CBN Governor Olayemi Cardoso announced that the central bank would no longer issue new Ways and Means loans to the Federal Government until previous loans are repaid. This decision is part of broader efforts by the apex bank to control the country’s economic challenges.
Despite this, the latest CBN document confirms that Ways and Means Advances will still be available to the Federal Government, with a maximum cap of 5% of the previous year’s actual collected revenue. The document stresses that these advances must be repaid within the same fiscal year they are granted.
“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 CBN document states. “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 report further notes that Ways and Means Advances would now be determined after accounting for the sub-accounts of various Ministries, Departments, and Agencies (MDAs), which are linked to the Consolidated Revenue Fund to arrive at the Federal Government’s overall 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.
