Nigeria has borrowed $33 billion form its own Central Bank to fund its budget deficit. Debt restructuring needed to stop the bubble to burst and to make Nigeria economy strong again.
Finance Minister Wale Edun said, “We are bringing order to government borrowing“.
For long cash, shortages have plagued Nigeria’s economy, due to a CBN directive. One of the largest economy in Africa had to print new currency for financing its fiscal deficit.
On March 2023, Supreme Court of Nigeria has ordered the Central Bank of Nigeria to extend the use of old currency notes until December 31. The issue of withdrawal notes will become an election problem who causes anger. The Central Bank says that old notes will remain legal tender in 2024 and that there is no deadline.
President Bola Tinubu who took office in May 2023, dismissed the head of the Central Bank who for years has borrowed money to economy of Nigeria to fill the revenue gap making the bubble of debt bigger.
To get borrowing under control, lawmakers agreed to convert 22.7 trillion naira of the Central Bank loans into a 40-year bond at an interest rate of 9%. On December 31, Tinubu has requested new conversion of 7.5 trillion naira into longer-dated bonds making a public debt around 95 trillion naira.
Inflation rose up to 28.5% last month, the highest inflation rate in last 18 years by the World Bank information. Unleashing such an economic reform will have his consequences who directly influence the cost of living and making a huge crisis.
Nigeria must stop borrowing money and go into debt more, because the cost of living will rise drastically, making the people of Nigeria poor. The effect of debt is inflation, which will last for a very long time in Nigeria.
Finance Minister Wale Edun said, “We are very optimistic that not only will this budget be funded adequately, but it will be funded on a timely basis as well”.