The Federal Government has has pledged to adhere to statutory limits in seeking budget support facilities from the Central Bank of Nigeria (CBN) through its Ways and Means Advances and as they commenced  discussion with the World Bank for a $1.5 billion loan.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated this at the just concluded World Bank/International Monetary Fund (IMF) Annual Meetings in Marrakech.

Prior to the government’s announcement, the CBN Governor, Dr Olayemi Cardoso, said the bank was considering control options to enforce statutory limits on the use of Ways and Means for financing the public sector deficit, leading to suggestions that the CBN is looking into measures to regulate government spending and manage fiscal policies effectively.

According to section 38 (1) of the CBN Act, borrowing via ways and means must be temporary and should only occur “in respect of temporary deficiency of budget revenue”.

This means that the bank can only lend to the Federal Government when the latter has a temporary revenue shortfall. Currently, the country’s total public debt stands at N87.4 trillion as at Q2 2023, with the major addition to the public debt stock being the N22.71 trillion securitised FGN’s Ways and Means advances.

This, according to Cardoso, is why the apex bank may come up with enforcing limits on Ways and Means used to finance the public sector deficit, which could be related to controlling government’s spending or managing its fiscal policies effectively.

However, Edun emphasised that President Bola Tinubu is dedicated to “keeping with the spirit and the letter” of CBN’s autonomy. He further disclosed that the country is in discussions with the World Bank for a $1.5 billion budget support.

He said, “The World Bank is the number one development bank that assists developing countries in funding their projects and programs. We are delighted that this funding will be available soon, as World Bank financing is highly cost-effective.”

The Minister expressed concerns about financing, especially in the context of global issues such as climate change. He mentioned the global need for approximately $1 trillion to address climate change and highlighted the availability of a climate financing fund that offers relatively inexpensive options.

According to him, the government plans to explore green bonds and other climate financing avenues to support climate transition efforts in Nigeria and other developing regions

“Additionally, there is a commitment to aid Africa and other developing regions in their climate transition efforts, as they bear little responsibility for significant contributions to climate change. “One of the ways to support them is through climate financing, and we will explore green bonds and various other climate financing avenues”, Edun said