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CBN gov declares end to Ways and Means

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Yemi Cardoso

The end of Ways and Means has been declared by CBN governor

Olayemi Cardoso, the Governor of the Central Bank of Nigeria, has announced that the apex bank will cease granting Ways and Means to the President until the previous loans are repaid. This decision is among the measures implemented by the apex bank to address the ongoing economic downturn in the country.

Ways and Means refers to the money lent by the Central Bank of Nigeria to the Federal Government temporarily to supplement spending until revenue is generated.

During the previous administration, the then CBN governor, Godwin Emefiele, reportedly printed N22.7tn for former President Muhammadu Buhari under Ways and Means without approval from the National Assembly.

Last Friday, Cardoso and the economic team held a meeting with the Senate Committees on Finance, Appropriations, Banking, Insurance, and other Financial Institutions. The purpose of the meeting was to address the current economic situation, particularly the free fall of the naira and the surge in food prices.

According to the CBN governor, the bank has responded to inflationary pressure with significant monetary policy tightening. He highlighted the increase in money supply and the factors driving it, including the rise in Net Foreign Asset and ways and means advances.

Furthermore, Cardoso emphasized the discontinuation of Ways and Means advances in compliance with the CBN Act (2007) and the restriction of advances to five percent of the previous year’s revenue.

He also mentioned the cessation of quasi-fiscal measures by the Central Bank of Nigeria, which previously contributed to excess naira and inflation.

The CBN governor expressed confidence that their efforts are starting to alleviate the economic situation in the country. He stated that the measures for exchange rate determination and foreign exchange inflows have already shown positive outcomes, with significant interest from Foreign Portfolio Investors.

Cardoso highlighted the potential of their measures to stabilize exchange rates but emphasized the need to moderate demand for foreign exchange to sustain these measures.

He also addressed the issue of the decline in the value of the naira against foreign currencies, advising Nigerians to reduce their consumption of foreign goods and their demand for dollars.

Regarding the inflation rate, the CBN governor assured that it is expected to decrease to 21.4% in 2024 due to the bank’s inflation-targeting policy, improved agricultural productivity, and easing global supply chain pressures.

Apart from Cardoso, other members of the economic team, such as the Ministers of Finance, Wale Edun; Budget and National Planning, Senator Atiku Bagudu, Agriculture and Food Security, Senator Abubakar Kyari, made presentations based on questions from lawmakers about the state of the economy.

Senator Sani Musa, the chair of the Senate Committee on Finance, raised concerns about the $3.3bn collected as a loan to rescue the naira, questioning the lack of positive effects felt months after.

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