Nigeria’s debt burden is poised to jump 50% after lawmakers approved President Muhammadu Buhari’s request to convert 22.7 trillion naira ($49 billion) in loans from the central bank into bonds, Bloomberg News reported. The Senate’s acceptance is expected to push the West African nation’s official debt-to-gross domestic product ratio toward a 40% limit set by the government. “The advances were made to ensure that the government does not shut down,” according to a report by a special committee that the upper chamber of parliament endorsed on Wednesday. The move will push Nigeria’s debt to a record of at least 69 trillion naira, adding to the challenges facing President-elect Bola Tinubu, who takes over on May 29. The Central Bank of Nigeria is allowed to provide temporary financing to the federal government, but Buhari’s administration has disregarded a law restricting outstanding loans to 5% of the previous year’s budget and mandating that the funding be repaid within the same year. “The capital market does not have the capacity to absorb 22.7 trillion worth of debt,” said Adetilewa Adebajo, chief executive officer of Lagos-based CFG Advisory. “The federal government is going to crowd out the private sector. It is surprising the Senate” is violating the law, he said.
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