The Central Bank of Nigeria experienced a significant decline of N4.145 trillion in net loans and receivables in 2024, mainly due to a reduction in its overdraft exposure to the Federal Government and changes in other loan categories.

The bank’s audited financial statements show that net loans and receivables dropped from N16.122 trillion in 2023 to N11.977 trillion in 2024 at the bank level.

At the group level, the figure decreased from N15.091 trillion to N10.959 trillion, representing a N4.132 trillion decline.

The largest decrease occurred in the overdraft granted to the Federal Government under the Ways and Means provision. In Nigeria, this provision allows the Central Bank of Nigeria to offer temporary financial advances to the government to address short-term funding shortages. Established under Section 38 of the CBN Act, 2007, it permits the government to borrow up to 5 percent of its actual revenue from the previous year.

The previous administration exceeded this limit, raising concerns about fiscal discipline and the impact on monetary policy.

To address these issues, the National Assembly approved the securitization of N22.7 trillion of these advances in 2023.

This move effectively converted the short-term overdrafts into long-term debt instruments, aiming to mitigate inflationary pressures and restore monetary stability.

The Federal Government has repaid ₦7.3 trillion of this debt, demonstrating its commitment to lessening dependence on central bank funding and strengthening fiscal discipline.

The facility, which stood at ₦7.948 trillion in 2023, was reduced to ₦3.268 trillion in 2024—a significant cut of ₦4.679 trillion, or 58.89 percent. This reduction aligns with Governor Yemi Cardoso’s reform efforts and signals a move away from fiscal dominance, responding to longstanding criticism of the central bank’s involvement in deficit financing.

It was earlier reported that the CBN’s earnings from the Federal Government’s overdraft facility dropped sharply from N1.6 trillion in 2023 to just N3.1 billion in 2024.

At the same time, there was a significant rise in the CBN’s Standing Lending Facility, which increased from N29.431 billion in 2023 to N386.904 billion in 2024.

The SLF is an important tool used by the CBN to manage short-term liquidity in the banking sector. It allows authorized financial institutions to borrow funds to cover temporary liquidity shortages, helping to maintain stability in the financial system.