Legal experts have examined the implications of the Central Bank of Nigeria’s (CBN) reaffirmation to maintain its Ways and Means Advances to the federal government at a 5% threshold for fiscal years 2024-2025.
The facility allows short-term borrowing to address budget deficits, but the advances must be repaid within the fiscal year to avoid long-term debt.
Prominent lawyers such as Dr. Olisa Agbakoba, SAN, and Professor Mike Ozekhome, SAN, commented on the legal and economic complexities.
Agbakoba emphasized the necessity of limiting the borrowing to prevent inflation, while Ozekhome pointed out that advances without supplementary budget authorization are unconstitutional.
Public interest lawyer Opatola Victor warned of the inflationary risks and growing national debt associated with misuse.
In May 2023, the Senate approved restructuring of N22.7 trillion in Ways and Means loans granted by the CBN.
Recently, the federal government has repaid N7.3 trillion to the CBN, while the bank’s governor, Yemi Cardoso, indicated that further advances would be halted until prior loans are repaid.