The Federal Government has officially exited the practice of servicing its debts through the Central Bank of Nigeria’s (CBN) Ways and Means advances, signaling a shift in financial management.
Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, made this revelation at the 2024 Access Corporate Forum, themed: ‘Nigeria’s Economic Rebirth: Hopes and Implications’.
The decision comes just days after the CBN stated it would continue to provide Ways and Means advances, capped at five percent of revenue, to the federal government for the 2024-2025 fiscal year. Ways and Means is a mechanism through which the CBN lends money to the government to cover budget shortfalls.
“We have exited Ways and Means,” Mr. Edun said, emphasising that the government will no longer depend on the CBN to service its domestic or foreign debts.
“What does that mean? It means that the government, when it has to pay domestic debt service or foreign debt service, does not go to the central bank to debit the consolidated revenue fund of the government, which means just printing the money.”
Mr. Edun explained that, moving forward, the government is implementing a “world-class treasury and liability management system” to improve financial oversight and management, with the full support of President Bola Tinubu.
In his address, Mr. Edun underlined that the successful implementation of the government’s economic stabilisation plan would bolster ongoing reforms and reinforce progress made so far.
Mr. Edun also outlined plans to strengthen Nigeria’s agricultural sector, with an ambitious program aimed at mobilising 360,000 farmers to cultivate 360,000 hectares of land. The initiative is expected to produce 1.4 million metric tonnes of maize, wheat, and cassava, aligning with the government’s goal of achieving food self-sufficiency.
“We must produce the food that we eat,” Mr. Edun said, emphasising the importance of domestic production in stabilising the economy.
In addition, the government is offering support and relief to manufacturers through various fiscal measures, with the goal of fostering growth in the industrial sector. Mr. Edun also revealed that the economic management team would be reconvened soon, as the government continues to finalise its broader economic plan.
As part of its efforts to simplify the tax system, the government is working to reduce the number of taxes businesses are required to pay to a single-digit figure. According to Mr. Edun, 90 percent of tax revenue currently comes from fewer than 10 taxes, and reducing the tax burden will encourage investment and economic expansion.
“There is ongoing work to bring down the rate of corporate income tax as we are trying to encourage investments in order to grow the economy,” Mr. Edun stated.
The Honourable Minister also noted that essential items such as food, pharmaceuticals, and health products would remain exempt from value added tax (VAT), while taxes on luxury goods would be adjusted upwards to generate additional revenue.
The forum highlighted the federal government’s commitment to enhancing fiscal discipline, boosting revenue, and fostering economic growth through reforms that target key sectors such as agriculture, manufacturing, and corporate taxation.
