The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, announced that the CBN will no longer provide Ways and Means to the Federal Government until the previous loans are repaid. This decision is part of the measures taken by the CBN to address the economic challenges facing the country. Ways and Means is the money that the CBN lends to the Federal Government temporarily to support spending until revenue is generated.
Cardoso, during a meeting with the Senate Committees on Finance, Appropriations, Banking, Insurance, and Other Financial Institutions, stated that the discontinuation of Ways and Means advances is in compliance with Section 38 of the CBN Act (2007). The CBN is no longer allowed to grant further Ways and Means advances until the outstanding balance as of December 31, 2023, is fully settled.
The CBN governor emphasized that the central bank has responded with significant monetary policy tightening to curb inflationary pressure. Measures include discontinuing Ways and Means advances and halting quasi-fiscal measures by the CBN that contributed to excess liquidity and inflation. Cardoso noted that these measures are already yielding results, with significant interest from Foreign Portfolio Investors supplying much-needed foreign exchange to the economy.
Additionally, Cardoso addressed the free fall of the Naira, urging Nigerians to reduce their demand for dollars and foreign goods. He emphasized that without moderation in the demand for USD, the CBN cannot stabilize the Naira quickly. The CBN governor highlighted ongoing efforts to enhance liquidity in the foreign exchange markets and stabilize the exchange rate.
The CBN’s efforts are part of an inflation-targeting policy aiming to rein in inflation to 21.4 percent in the medium term, aided by improved agricultural productivity and eased global supply chain pressures. The Senate Committees raised questions about the $3.3 billion loan to rescue the Naira and sought clarification on measures to support key sectors like agriculture and manufacturing. The economic team, including the CBN governor, Ministers of Finance, Budget and National Planning, and Agriculture, provided insights into the current economic situation and strategies for improvement.
