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Home»News»Buhari Seeks Fresh N1 Trillion Loan From CBN, Taking Total To $52 Billion
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Buhari Seeks Fresh N1 Trillion Loan From CBN, Taking Total To $52 Billion

Elvis EromoseleBy Elvis EromoseleDecember 23, 2022No Comments3 Mins Read
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President Muhammadu Buhari’s request to Nigeria’s parliament for approval to restructure debt owed to the central bank comes with plans to take on an additional loan of N1trn, which would raise the amount owed to 23.7 trillion naira or $52 billion and place further pressure on public finances.
On Wednesday, 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, 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.
According to a report by Bloomberg, 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 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.
President Buhari approved the plan to convert the debt, which has mostly been taken on since he was elected in 2015 to plug spending shortfalls after revenue collapsed on lower oil prices and production. It’s the most the government of Africa’s biggest economy has borrowed from the bank.
The International Monetary Fund and the World Bank have said the government practice of using central-bank financing undermines confidence and hampers investment. The IMF in February urged the government to reduce its dependence on the funding.
The central bank loans, which totalled 20 trillion naira as of March, aren’t included in the country’s debt stock of 42.8 trillion naira as of June.
The government owed the central bank 20 trillion naira as of March, according to a report by the budget office published in August. That amount may increase, after Finance Minister Zainab Ahmed said Wednesday that the government borrowed 5.33 trillion naira from January to August, including loans from the central bank, to partly fund this year’s budget deficit. She didn’t disclose what portion came from the bank.
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Elvis Eromosele

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