Nigeria: Central Bank’s money printing gambit ruined the economy, Senate concurs.

Africa

Nigeria: Central Bank’s money printing gambit ruined the economy, Senate concurs.

December 28, 2022December 28, 2022

Following concerns from some legislators, the Nigerian Senate on Wednesday increased the country’s 2023 budget by 6.4% to 21.83 trillion naira ($49 billion) and postponed a decision on the president’s request to convert central bank overdrafts to long-term bonds.

President Muhammadu Buhari asked parliament for permission in a letter dated December 20 to convert $53 billion in central bank loans to the government into bonds with a 40-year maturity and 9% interest, as well as an extra $1 trillion loan to the government’s bank.

However, Buhari has claimed that his administration was forced to borrow in order to exit two recessions in the previous seven years, despite the fact that economists claim Nigerian government spending on debt service exceeds that on health and education.

In a boisterous session, some lawmakers claimed that the loan conversion was unlawful, which prompted Senate President Ahmad Lawan to postpone voting on the plan.

In order to lower double-digit inflation, the IMF has urged Nigeria to gradually stop supporting the government with money from the central bank.

In October, Buhari unveiled a 20.51 trillion naira budget for 2023. However, lawmakers increased the budget projection on Wednesday, going from $70 per barrel to $75.

The amended budget must be signed into law by the president.

As Nigerians prepare to cast their ballots in the country’s national elections in February, incumbent President Buhari will not seek for reelection. These challenges include rising debt, slow economic growth, high inflation, and growing insecurity.

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