Nigeria seeks new Central Bank loan, taking total to $52 billion
Nigeria’s government is seeking lawmakers’ approval to restructure debt owed to the central bank and also to take on an additional loan, which would raise the amount owed to 23.7 trillion naira ($52 billion) and place further pressure on public finances.
The administration asked that senators allow for the restructuring of so-called ways and means borrowing from the Central Bank of Nigeria, converting it to 40-year bonds at 9% interest, Senate President Ahmed Lawan told lawmakers on Wednesday, citing a letter from President Muhammadu Buhari.
The loans stood at 22.7 trillion naira as of Dec. 19, Lawan said. Buhari also asked for a three-year moratorium on interest payments on the existing debt, and sought another 1 trillion naira from the CBN on the same terms.
The request sheds light on the debt owed to the central bank by the government — data that aren’t readily captured in the outstanding debt inventory of Africa’s largest economy.
Nigeria’s public-debt stock was 44 trillion naira on Sept. 30; adding the central bank loans — including the extra 1 trillion naira sought — raises the total by 54% to 67.7 trillion naira. That will add further pressure to debt-service costs, which are forecast to surpass revenues this year, constraining the country’s capacity for critical spending.
Africa’s most populous nation has relied on the central bank for the easy loans instead of implementing spending reforms after revenue collapsed on lower oil prices and production. This has “complicated the macroeconomic management with a visible impact on inflation, costs of debt servicing, and debt transparency” the World Bank said in a report last month.
