Nigeria’s reliance on the Central Bank of Nigeria’s Ways and Means financing facility has declined sharply, dropping to N2.84 trillion as of January 2026 from a peak of N26.95 trillion recorded in May 2023. The development signals a significant shift in fiscal and monetary coordination as authorities seek to stabilise the economy and curb inflationary pressures.
Central Bank Governor Olayemi Cardoso disclosed the figures while addressing participants at the 2026 Monetary Policy Forum in Abuja, where he highlighted early signs of macroeconomic stabilisation after a prolonged period of fiscal stress and currency volatility. He noted that while key indicators are improving, sustaining the progress will require continued policy discipline and careful management of economic trade-offs.
Brandspur Banking News Desk reports that Ways and Means advances, which function as a short-term overdraft facility for the Federal Government, had expanded dramatically in previous years to cover revenue shortfalls, contributing to rising inflation and exchange rate depreciation. The sharp reduction in outstanding advances reflects efforts by monetary authorities to restore central bank independence and reinforce adherence to statutory limits on government borrowing.
Cardoso explained that despite the improving outlook, Nigeria’s economy is still navigating the effects of tight monetary conditions, including elevated interest rates and restricted access to credit. He acknowledged that the disinflationary trend currently being observed is partly the result of these restrictive policies, which have weighed on business activity and borrowing across key sectors.
The CBN governor also revealed that the country’s external reserves have strengthened considerably, with gross reserves rising to $50.12 billion. Net reserves, which had fallen to $3.99 billion at the end of 2023, rebounded to $34.80 billion by 2025, reflecting improved foreign exchange inflows and tighter controls on fiscal financing.
Meanwhile, negotiations between the Federal Government and indigenous contractors over outstanding payments gained momentum after the threat of protests during the All Progressives Congress national convention. The President of the All Indigenous Contractors Association of Nigeria, Jackson Nwosu, confirmed that discussions with the Minister of Finance, Wale Edun, were ongoing regarding N150 billion in unpaid contract balances.
Contractors had earlier warned of demonstrations over delayed payments, stating that the debts relate to capital projects executed across several states and the Federal Capital Territory in 2024. Following a meeting with government officials, the association indicated that authorities had proposed an initial payment of 35 per cent of the disputed sum, with the remaining balance to be settled in phases.
Nwosu described the outcome of the discussions as encouraging, although he stressed that contractors would continue to monitor the situation closely to ensure that the government follows through on its commitments. He also advised members to obtain updated batch numbers from relevant Ministries, Departments and Agencies to facilitate the verification and payment process.
The scaling down of Ways and Means financing is widely seen by economists as a critical step towards restoring fiscal credibility and reducing the inflationary impact of excessive deficit financing. Analysts argue that limiting central bank funding of government spending will help anchor inflation expectations, strengthen the naira, and improve investor confidence in Nigeria’s economic management.
However, experts caution that maintaining this discipline will depend on the government’s ability to boost revenue generation and control public spending, as heavy reliance on overdraft financing in the past had masked structural weaknesses in fiscal planning. The ongoing negotiations with contractors also highlight the challenges of balancing fiscal consolidation with the need to settle existing obligations to businesses and service providers.
As Nigeria continues its economic reform efforts, the reduction in Ways and Means advances and the strengthening of foreign reserves are being closely watched by investors and multilateral institutions as indicators of policy credibility and long-term macroeconomic stability.
