Nigeria Senate's New Borrowing Bill Approval
The Nigerian Senate, on Saturday, made significant amendments to a law to authorize the federal government to borrow more funds from the central bank. This move comes on the eve of President-elect Bola Tinubu taking office, granting him a potentially crucial financial tool.
Details of the Amended Legislation
The approved changes will enable the government to raise its overdraft at the Central Bank of Nigeria to 15% of the prior year's revenue, an increase from the previous limit of 5%. The lower House of Assembly had previously endorsed the changes on Thursday.
Economic Challenges Facing the New Administration
President-elect Tinubu is set to inherit a weak economy with record debt levels and dwindling oil output. Double-digit inflation is one of the most substantial challenges awaiting him, which has significantly eroded savings and wages. This issue is expected to be a key topic on his agenda upon his inauguration on Monday.
Efforts to Mitigate the Growing Deficit
Spending in Africa's most significant economy has surpassed revenues, leading to expanding deficits. The government has been trying to bridge this gap through the central bank's overdraft facility, known as 'ways and means, and has already exceeded the former 5% limit several times.
Immediate Action Expected on the New Bill
President Muhammadu Buhari, who will be stepping down on Monday after serving the maximum of two terms, could enact the amendment bill as early as Sunday.
Senate's Previous Debt Conversion Plan
Earlier this month, the Senate and House of Assembly endorsed President Buhari's strategy to convert 23.7 trillion nairas ($52 billion) in central bank overdraft into long-term debt. This decision will help the incoming administration manage the country's financial health and economic stability.