The Central Bank of Nigeria (CBN) has urged all state governments to cut back on overdraft facilities and shift toward sustainable budgeting to safeguard their finances.

This advice addresses mounting worries about escalating subnational debts and the heavy use of short-term loans to cover daily operations and infrastructure needs. The CBN warns that constant overdraft dependence strains state budgets, erodes fiscal health, and piles on future repayment costs.

Instead, the bank pushes states to boost internal revenue collection, enforce tighter budget controls, and pursue smarter borrowing options.

Experts echo these concerns, highlighting how overdraft overuse hampers funding for key areas like health, education, roads, and farming. Short-term fixes might ease cash crunches from low revenues, but long-term addiction risks broader economic fallout.

The CBN recommends ramping up tax efficiency, diversifying local economies, and forging public-private partnerships to spark investments and jobs. Many states grapple with shrinking federal transfers, ballooning salaries, and inflation, often turning to emergency loans just to pay bills.

Yet, the apex bank insists robust planning and open financial reporting can slash borrowing needs. This push aligns with ongoing efforts to bolster Nigeria's overall fiscal resilience and rebuild trust in its financial framework.