Nigeria gobbles up half its annual borrowing allowance

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ABUJA – Nigeria has already used half borrowing allowance it has budgeted for and has not released any funds for capital expenditure so far this year, as lower oil prices eat into its revenues, country’ finance minister said .

“We have serious challenges,” Finance Minister said in an emailed statement. “Things have been tough since beginning of year and they are likely to remain so till end of the year.”

borrowed has been spent to cover overhead, including salaries, minister said.

Lawmakers in biggest and oil producer last week passed a 4.49 trillion ($23 billion) budget for 2015, 3.2 percent lower than last year’ spending . It was forced to cut spending after global oil prices slumped.

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The budget took longer than usual getting through parliament, worsening the cash squeeze, because of the closely fought general elections in March, which saw incumbent President Goodluck Jonathan defeated.

“As a result of the 50 percent decline in oil revenues, the country has faced a difficult cash crunch … of the 882 billon budgetary provision for borrowing, the government has borrowed 473 billion to meet up with recurrent expenditure,” the finance ministry said.

Okonjo-Iweala had projected annual domestic borrowing last year would fall to below 500 billion from 577 billion in 2013.

The borrowing requirement this year could crowd lending to the real , raising domestic interest rates and yields government bonds, which could hurt growth. Forecasts for growth have already been lowered twice this year.

The ministry said that inflation is still in single digits and that the Nigerian is projected to grow by 4.8 percent this year.