Nigeria Ways and Means Freeze: CBN Takes Drastic Measures, No Loans to Federal Government Without Debt Settlement, Says Cardoso

Olayemi Cardoso, Governor of the Central Bank of Nigeria, revealed a significant change in the bank's policy on lending to the Federal Government. During discussions with the Senate Committee on Banking, Insurance, and Other Financial Institutions, Cardoso stated that the Central Bank will no longer provide loans to the federal government until all existing debts are settled.

The loan facility known as "Ways and Means," used by the Central Bank to support the government's budget, has been suspended until outstanding balances are paid. Governor Cardoso highlighted the importance of the government settling its debts before seeking further loans, citing Section 38 of the CBN Act (2007). This decision aligns with the bank's commitment to fiscal responsibility and legal mandates.

The suspension of quasi-fiscal measures, totaling over N10 trillion, reflects the Central Bank's dedication to prudent financial management and inflation-targeting strategies. Economists and financial analysts emphasize the need for collaborative efforts between fiscal and monetary authorities to address underlying fiscal challenges for sustainable economic growth.

The upcoming Monetary Policy Committee (MPC) meeting in late February is anticipated to shape future monetary policies, focusing on inflation-targeting frameworks, policy rates, and strategies for investment and job creation.

Governor Cardoso's announcement signals a crucial moment in Nigeria's economic journey, showing a determined effort to address fiscal imbalances and promote long-term financial stability. Collaboration between government institutions and stakeholders is crucial as the nation works towards sustainable economic development.