© Reuters. FILE PHOTO: A view of the headquarters of the Central Bank of Nigeria next to the National Ecumenical Center in Abuja, Nigeria, November 23, 2021. REUTERS/Avolabi Sotonde
ABUJA (Reuters) – Nigeria’s upper house on Saturday amended a law to allow the federal government to borrow more money from the central bank, just days before incoming President Bola Tinubu takes office.
The changes, adopted during an emergency session, will allow the government to increase overdrafts at the Central Bank of Nigeria to 15% of the previous year’s revenues, from 5%. The House of Representatives approved the changes on Thursday.
Tinubu inherits anemic economic growth, record debt, and shrinking oil production. Double-digit inflation, which has eroded savings and wages, is one of the biggest problems he will face when he is sworn into office on Monday.
Spending by Africa’s largest economy far exceeded revenue, widening the deficit.
To bridge the gap, the government has relied on the central bank’s overdraft facility, known for its ways and means, breaching the 5% limit several times.
The amendment bill is likely to be signed by President Muhammadu Buhari as soon as Sunday, who will step down on Monday after serving a maximum of two terms.
Earlier this month, the Senate and House of Representatives approved Buhari’s plan to convert 23.7 trillion naira ($52 billion) of central bank overdrafts into long-term debt.