Reports in the media suggesting that the Central Bank of Nigeria (CBN) under Dr. Yemi Cardoso has granted overdrafts (ways and means) to the Federal Government is untrue, data analysed by Economy Footprint has shown.
Some sections of the media (not Economy Footprint) suggested the CBN has granted FG overdrafts of about N3.8 trillion in the last half of 2023.
Checks by Economy Footprint have shown that the FG hasn’t borrowed money from the CBN since Dr. Cardoso assumed office as the CBN Governor.
Dr. Cardoso after his confirmation by the Senate, officially assumed office as the substantive Central Bank of Nigeria (CBN) Governor on Thursday, October 05, 2023. He got onboard alongside an adept team of Deputy Governors. They include the ideas-driven Dr. Bala Bello, MON, the Deputy Governor, Corporate Services Directorate, Mr. Muhammad Sani Abdullahi, Deputy Governor, Economic Policy Directorate, Mr. Philip Ikeazor, Deputy Governor, Financial System Stability Directorate, and Ms. Emem Usoro, the Deputy Governor, Operations Directorate.
The team announced far-reaching reforms that included discouraging the granting of ways and means (overdrafts) to the federal government until the over N22.7 trillion overdraft granted under the immediate past President Muhammadu Buhari is fully liquidated or at least repaid to the minimum acceptable threshold prescribed by the CBN enabling law.
In February 2024, Dr. Cardoso, reiterated that the CBN “will no longer give Ways and Means to the Federal Government until the previous loans are repaid.”
Data published in the latest CBN Statistics bulletin for the fourth quarter of 2023 recently released by the indicated additional ways and means were granted the FG in Q4 2023. The CBN’s data show that the total figure rose by over N4 trillion.
A further interrogation of the data showed that all the ways and means granted in 2023 were under Mr. Godwin Emefiele’s tenure as the apex bank governor.
A management staff of the apex who spoke to Economy Footprint under anonymity confirmed the CBN hasn’t granted any overdrafts yet.
“Yes, we have not granted any overdraft to the federal government since we assumed office. The report released was way back in 2023. Not by Cardoso and his team,” he said.
Experts have commended the CBN’s bold decision to discourage ways and means as it has influenced inflation significantly. A recent report indicated that some of the overdrafts granted to the FG in the last eight years haven’t been properly accounted for. Also, President Buhari through the Ministry of Finance had secularised some of the debts and converted them into bonds having obtained approval from the Senate. Until the Senate’s clandestine approval, it was illegal for the FG to secularize overdrafts. In a similar fashion, the National Assembly had jerked up the overdraft ceiling from 5 percent to 15 percent thus, giving the FG more room to get ways and means whilst the economy gets hurt with more liquidity and accountability.
Financial experts are unanimous on the current stance of Dr. Cardoso not to grant more overdrafts. They reckon this decision will help the CBN effectively monitor the money supply and fight biting inflation.
