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Akinwande Soji-Ojo
The Governor of Central Bank of Nigeria (CBN), Mr Yemi Cardoso, has said the apex bank will stop its ways and means advances to the federal government.
Cardoso stated this while appearing before the senate committee on banking, insurance and other finance institutions, in Abuja, on Friday.
Ways and means is a loan facility through which the CBN provides short-term financing to cover the government’s budget deficits.
According to Cardoso, CBN will no longer be a part of ways and means agreement with the federal government until all outstanding debts are refunded.
He said the decision was in line with Section 38 of the CBN Act 2007.
“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 per cent of the previous year’s revenue,” he said.
The CBN Governor said the payment of the outstanding balance of the ways and means will control inflation in the country.
On December 30, 2023 the National Assembly approved President Bola Tinubu’s request for the securitisation of outstanding N7.3 trillion ways and means debt balance.
Earlier, the senate had on May 23, 2023, approved the sum of N22.7 trillion ways and means loan, thus securitising the debt. President Muhammadu Buhari had made the securitisation request on December 28, 2022.
Securitisation is the practice of pooling together various types of debt instruments and selling them as bonds to investors.
Cardosso: CBN will no longer fund intervention programmes
Meanwhile Cardoso has said CBN would no longer fund intervention programmes.
The CBN Governor stated this while addressing thr lawmakers.
He said the apex bank had halted over N10 trillion quasi-fiscal measures which were disguised as “intervention programmes” over the years.
“On our side at CBN, we have responded with significant monetary policy tightening to rein in inflationary pressures.
“We have also halted quasi-fiscal measures totalling over N10 trillion at the CBN previously disguised as development finance interventions. These measures have contributed to an increase in money supply, raising prices to the level of inflation we are grappling with today.
“On the issue of development finance, we are coming to terms with a large amount of liquidity that was pumped into the system that created a lot of distortions and a lot of it didn’t get to what it was designed to get to.
“All we are saying as the central bank is that we cannot engage in interventions,” the CBN Governor said.
Cardoso also said the apex bank will review other situations and take further decisions on these important issues at the forthcoming monetary policy committee (MPC) meeting scheduled for February 26 and 27.