By Ihechi Enyinnaya
The Central Bank of Nigeria (CBN) has decided to uphold its 5% limit on Ways and Means Advances for the 2024-2025 fiscal years, despite recent legislation from the National Assembly proposing an increase to 10%.
Ways and Means Advances are short-term loans from the CBN used to cover government budget deficits, and they are subject to legal limits to prevent excessive borrowing.
The CBN’s report, titled “Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the Fiscal Years 2024-2025,” confirms that this limit adheres to the Medium-Term Fiscal Framework (MTFF). The MTFF aims to manage economic expectations, enforce consistent policies, respond to economic shocks, and ensure macroeconomic stability.
In February 2024, CBN Governor Olayemi Cardoso announced that the bank would halt new Ways and Means Advances until existing loans were repaid to address economic issues.
The new CBN guidelines reiterate that Ways and Means Advances will remain available to the federal government only up to 5% of the previous year’s revenue. These advances must be repaid within the fiscal year they are granted.
The report also notes that advances will be calculated by considering sub-accounts of various ministries and agencies connected to the Consolidated Revenue Fund, reflecting the Federal Government’s consolidated cash position. This practice will continue in the 2024/2025 fiscal years, in line with the Treasury Single Account framework.