LAGOS, Nigeria — Africa’s richest economy is borrowing money to pay salaries as it struggles through a “difficult cash crunch” brought on by halved oil prices, Nigeria’s finance minister revealed Tuesday.
The news comes as Nigeria prepares to welcome a new government at the end of month and its naira currency remains in a slump, hovering between 180 and 220 to the U.S. dollar. It was trading at 160 a few months ago.
Minister Ngozi Okonjo-Iweala tried to be upbeat in a speech after the legislature Tuesday approved the 2015 budget thrice revised because of slashed oil prices that provide 80 percent of revenue for the government of Africa’s biggest petroleum producer.
She said “revenue challenges” have prohibited the release of any funds for capital expenditure this year but that food prices and single-digit inflation remain quite stable. And she said the economy still is on course to grow 4.8 percent this year.
“We have front-loaded the borrowing program to manage the cash crunch,” Okonjo-Iweala told legislators. “Out of the 882 billon naira budgetary provision for borrowing, the government has borrowed 473 billion naira to meet up with recurrent expenditure, including salaries and overheads.”
That’s bad news for the incoming government of President-elect Muhammadu Buhari, who takes over May 29 from incumbent Goodluck Jonathan.
Buhari acknowledges that constricted revenue and endemic corruption threaten his will to deliver on development and reconstruction of areas devastated by a nearly 6-year-old Islamic uprising in the northeast.
He says his fight against corruption should produce the money needed to bring change to a country where petroleum riches benefit a small clique while the majority of the 170 million people in Africa’s most populous nation live hand to mouth.
Critics blame the financial crisis in part on the most expensive election ever held in Nigeria, though no one knows how much politicians from both sides spent trying to buy influence and bribe voters.
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