CBN Gov Declares End To Ways, Means For FG, Vows Tightened Monetary Policy

In a move to address economic challenges, the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has announced the cessation of Ways and Means advances to the Federal Government until previous loans are repaid, emphasizing a commitment to tighter monetary policy.

Speaking before the Senate Committees on Finance, Appropriations, Banking, Insurance, and Other Financial Institutions, Cardoso outlined measures aimed at tackling the country’s economic woes.

He emphasized the need for compliance with existing laws and the discontinuation of quasi-fiscal measures that contribute to inflationary pressures.

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Cardoso stated, “The bank must strictly adhere to the law limiting advances under ways and means to five percent of the previous year’s revenue.” He highlighted efforts to curb inflation, citing empirical analysis linking money supply to inflationary pressures.

Furthermore, Cardoso lauded fiscal authorities’ efforts to discontinue Ways and Means advances, signaling collaboration between monetary and fiscal policies to achieve price stability. He expressed optimism that these measures, coupled with the adoption of an inflation-targeting framework, would yield positive results in stabilizing the economy.

Addressing concerns over exchange rate volatility and the depreciation of the Naira, Cardoso urged moderation of foreign exchange demands. He underscored the importance of sustainable measures to enhance USD supply into the Nigerian economy, emphasizing collaboration among stakeholders to stabilize the exchange rate.

In response to senators’ inquiries regarding the efficacy of interventions to rescue the Naira, Cardoso reassured Nigerians of the CBN’s commitment to reducing inflation to 21.4% in 2024. He emphasized the need for comprehensive strategies to address exchange rate volatility and stimulate economic growth.

Senator Sani Musa raised questions regarding past transactions and compliance with banking regulations, calling for a forensic investigation into the CBN’s operations. Senator Adetokunbo Abiru emphasized the importance of supporting productive sectors such as agriculture and manufacturing to foster economic growth.

Senator Orji Uzor Kalu advocated for measures to strengthen the Naira and curb dollarization, urging accountability in addressing defaults and reconciling with labor unions to avert further economic unrest.

The CBN’s decision to halt Ways and Means advances reflects a proactive approach to addressing economic challenges, signaling a commitment to fiscal discipline and collaborative policymaking to achieve sustainable growth and stability.