Nigeria Rejects CBN Money Printing for Budget Funding Amid Revenue Challenges

Federal Government opts for bonds to attract private investments, avoiding Central Bank funding

Amidst fiscal challenges and revenue pressures in the 2024 national budget, the Federal Government of Nigeria has declared its decision to no longer allow the Central Bank of Nigeria (CBN) to print money through Ways and Means to fund the budget deficit.

In a statement to journalists in Lagos, the Minister of Budget and National Planning, Atiku Bagudu, emphasized the shift away from money printing by the CBN. He outlined the government's new strategy, highlighting a reliance on issuing bonds, which is expected to not only cover deficits but also attract private investments.

Bagudu stated: "The central bank is not going to print money for the government anymore. If, to the extent that we would borrow from the Central Bank, it is going to be within what the law allows. The law allows that we can borrow but not more than 5% of the previous year’s revenue. What we have been doing wrong is to go beyond that 5% limit."

He further explained that in case of borrowing, the government would opt for issuing bonds, presenting an opportunity for private investors to contribute. The move aligns with legal restrictions that cap borrowing at 5% of the previous year's revenue.

Despite the adjusted 2024 budget projecting a deficit of N9.2 trillion (about 3.9% of the GDP), Bagudu noted changes made by the National Assembly in key revenue lines. He acknowledged the complexities of managing budgets in a democracy and highlighted the need for fiscal responsibility through oversight and interrogation.

Addressing concerns about the national debt, Bagudu justified the necessity of borrowing, citing essential expenditures like education and security challenges. He emphasized that certain spending cannot be deferred, and despite efforts to minimize borrowing, there exists an "irreducible minimum" requirement that must be met.

The Minister concluded by drawing attention to Nigeria's relatively low revenue collection compared to other countries globally, emphasizing the challenges posed when facing commitments without sufficient revenue.