President Muhammadu Buhari said in a letter to parliament that Nigeria will convert a total of 23.7 trillion naira ($53 billion) in short-term loans owed to its central bank into 40-year debt at 9% interest.
The biggest economy in Africa has battled with low earnings as a result of petroleum theft in the area that produces oil. According to a Senate investigation released in November, oil theft cost it more than $2 billion in the first eight months of this year.
However, Buhari has claimed that his government was forced to borrow in order to exit two recessions in the previous seven years. Economists claim that the Nigerian government spends more on debt repayments than on health and education.
With a majority in the legislature, Buhari’s party has never had a request for approval denied.
Nigeria’s economy has begun to expand, but it is in fragile shape, and its dominating oil sector is not performing well.
Nigeria’s rating was lowered by Fitch last month to “B-” with a stable outlook, in part due to a worsening of its debt servicing.
As of Dec. 19, according to Buhari, the government owed the central bank 22.7 trillion naira ($51 billion) in temporary advances, which he termed as “short-term or emergency finance to meet delayed government expected cash receipts.”
Buhari requested authorization for a further one trillion naira central bank advance to the government in a letter to parliament dated December 20.
In addition, Buhari asked for an additional 819.5 billion naira ($2 billion) in 2022 spending, which will be paid for by local borrowing.
Local borrowing caused Nigeria’s overall public debt to increase by 3% to $103.3 billion in the second quarter. According to figures from the finance ministry, the budget deficit to revenue ratio reached 74% this year and may increase to 111% next year.
The amount of interest now being paid on the debt that would be rescheduled was not made public by the government.
