The Central Bank (CBN) governor,Godwin Emefiele has rationalised the much criticised ways and means advances, regarded as overdraft credits to the federal government.
Emefiele explained that the reason why the apex bank continues to support the government through ways and means is part of its responsibility as the lender of last resort to the country.
Metrobusinessnews.com (MBN) had reported about the advances, which analysts say, while t was desirabe and falls within the constitutional mandate of the regulatory bank, but, they have continued to quarrel with the burgeoning amount which they claim had gone beyond the limit allowed by law.
The ways and means figures as more than doubled since 2015 hitting an all-time high of over N22.8 trillion as of September 2022.
But, according to Emefiele, “the central bank is a banker to the government and also a lender of last resort to the government” making it responsible for back-stopping the government in times of need, according to Nairametrics.
He cited a drop in oil prices, two recessions, and the covid-19 pandemic as a combination of economic challenges that decimated the revenues of the government.
According to him “because we are lender of last resort, it will be irresponsible for us to sit idle, it will be a dereliction of our duty as the lender of last resort to ignore the government and allow the economy and Nigerians to suffer.”
He also stated that what they did is not new claiming other central banks around the world do similar when faced with an economic crisis.
“What we did by lending to the government as lender and banker of last resort is normal in any part of the world particularly when countries face crises. Any central bank, any FED will do what we have done.”
“So that we appeal to those who are exaggerating the purpose behind ways and means to take it easy with us and believe that by the special grace of God that since the president has written to the national assembly, we will eventually give the approval to allow CBN to securitize” the loans.
However, the Senate could not approve the president’s request last year before they went on recess as they claimed it did not get sufficient information necessary enough to make a decision.
According to Ahmad Lawan, senate president, late last year, after the passing of the 2023 national budget of about N21.8 trillion, a committee has been set up to collect the necessary information on the issue.
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The ways and means provision allows the government to borrow from the Apex Bank if it needs short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.
Provisions in the act cap monetary financing of fiscal deficits at 5% of the prior year’s revenues.
However, since the government started experiencing a significant shortfall in revenue, it has relied heavily on CBN to finance its expenditure programs via Ways and Means.
The latest data suggest the total amount is now N22.8 trillion.
