The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has said that the Ways cannot sustain the federal budget and Means advances from the Central Bank of Nigeria.
The Minister made this statement yesterday at the National Economic Summit in Abuja.
He emphasised that monetary policy instruments are not meant to fund fiscal deficit, stating that the present administration is addressing the imbalances between both sides of the economy.
His words: “ President is somebody that believes in the rule of law that includes respecting the autonomy of the central bank both in the letter and the spirit.
However, it is one government; at the end of the day, foreign exchange belongs first and foremost to the federal government, not the central bank.
“In terms of stabilisation, the other area is getting the hand of the fiscal deficit making sure that the deficit is reduced, the deficit is funded conventionally and that means dealing with ways and means.
“Ways and Means are essentially outside the law and it is not a sustainable way to fund the federal budget.
Those are the areas the government has a plan is coherent and that will provide the basis for investment, and growth,” he added.
Speaking on the current foreign exchange crisis, the finance minister confirmed that the government was working to ensure ease of transaction and access in the foreign exchange market.
He said that the system will be simplified and digitized to ensure transparency and promote liquidity in the market.
“There is a revamping of the FX market. The FX market will be simplified, digitized, and reformed such that all legal and legitimate transactions will fall within the purview of the authorities of the formal market.
“Anything outside that will be illegal, criminal, and punished. If you want to pay school fees and health bills, it will be simplified in such a way that you will be able to provide perhaps an identity such as BVN, NIN and you’ll do your transaction,” he added.
He said that the President recently signed two executive orders to effectively and legally allow the inflow of supply of foreign exchange from the domestic market into the formal banking system.
“Mr. President announced that he had taken measures to deal with the illiquidity in the foreign exchange market which we know is very problematic at this time.
“The market is illiquid because there is not enough supply of FX. The solution the president has put on the table is that he has signed an executive order that effectively and legally allows all the cash that is in the domestic economy to come into the formal monetary supply.
“People will be able to take the cash that they have and put it inside the system along with that there is another executive order that allows the domestic issuance of foreign currency so that they’ll have an incentive to provide that foreign exchange from whatever source into income bearing instrument.”
