• Targets new regulatory frameworks to unlock dormant capital
By Chinwendu Obienyi
THE Central Bank of Nigeria
(CBN) on Thursday, revealed
that it is considering control
options to enforce statutory
limits on the use of its Ways
and Means for financing the
public sector deficit.
The apex bank also noted
that it is looking at facilitating
new regulatory frameworks
to unlock dormant capital,
increase access to consumer
credit and expand financial
inclusion.
Its Governor, Dr Yemi Car- doso, stated this in a statement
seen by Daily Sun.
According to section 38
(1) of the CBN Act, borrow-
ing 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 Gov-
ernment 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 lim-
its on Ways and Means used
to finance the public sector
deficit, which could be related
to controlling government’s
spending or managing its fis-
cal policies effectively.
Whilst stating that the fi-
nancial regulator will put a
stop to direct development fi-
nance interventions, Cardoso
explained that the CBN needs
to return to its core functions
of monetary policy and adviso-
ry roles to support economic
growth.
According to the head of
the apex bank, under previ-
ous leadership, the CBN had
included fiscal intervention
in its functions and that had
blurred the lines between
monetary and fiscal environ-
ments.
Cardoso said, “In refocus-
ing the CBN to its core man-
date, there is a need to pull
it back from direct develop-
ment finance interventions into more limited advisory
roles that support economic
growth”.
He said the apex bank’s
advisory roles could include
acting as a catalyst to promote
specialised institutions and
financial products that sup-
port emerging sectors of the
economy, adding that new
regulatory frameworks will be
facilitated to unlock dormant capital in land and property
holdings, as well as increase
access to consumer credit and
expand financial inclusion to
the masses. Part of the activi-
ties of the CBN,he said will
include increasing private
sector investment in housing,
textiles and clothing, food
supply chain, healthcare, and
educational supplies by de-
risking instrumentation.