Nigeria’s President Muhammadu Buhari says Africa’s largest economy will have to pay 1.8 trillion naira ($4bn) extra interest this year if parliament rejects a loan-to-bond swap request on the central bank’s overdrafts to the government.
Buhari made the comments in his budget speech to parliament after signing the 2023 budget into law on Tuesday.
In December, the Senate delayed a decision on the president’s request to convert $53bn worth of central bank overdrafts to the government into 40-year bonds after some lawmakers questioned the plan.
In his speech on Tuesday, Buhari said the government currently pays a 3 percent margin above the central bank’s lending rate of 16.5 percent but his administration has negotiated a rate of 9 percent for the bonds.
Lawmakers increased the size of the 2023 budget by 6.4 percent to 21.83 trillion naira ($49bn) after they raised the assumed oil price benchmark to $75 a barrel from $70.
“Considering the imminent transition process … I decided to sign the 2023 appropriation bill into law … to enable its implementation to commence without delay,” the president said, referring to a general election coming up in February.
Having completed the maximum two terms allowed by the constitution, Buhari is not standing for re-election.
Rising debt, weak economic growth, high inflation and mounting insecurity are major issues for many Nigerian voters.
The International Monetary Fund has urged Nigeria to phase out central bank financing of the government to help reduce double-digit inflation.
Economists say Nigeria’s government is spending more money on debt repayments than on education and health, but Buhari has said his government had no choice but to borrow its way out of two recessions in the past seven years.