The Central Bank of Nigeria granted lenders permission to write off any fully provided non-performing loans without waiting for the full year required by regulations, as authorities seek ways to boost lending and avert a recession in Africa’s biggest economy.

The decision follows a request by banks for an amendment to the rule that requires lenders to retain bad debt in their books for 12 months before they are written off, after setting aside money for them, according to the central bank. The Abuja-based regulator said it had no intention of repealing the rule and granted a “one-off forbearance, this year,” according to a statement dated July 28 and posted on its website Tuesday.

The Central Bank of Nigeria’s director for banking supervision, Tokunbo Martins, last month ordered lenders to fully cover foreign-currency denominated debt that increased as a result of the 38 percent devaluation of the naira since a peg against the dollar was dropped in June. The country’s economy may contract 1.8 percent this year, according to the International Monetary Fund, as authorities struggle to cope with tumbling oil prices that have lowered government revenue. 

The decision on forbearance was taken “in view of the current macro-economic challenges” facing the nation, the central bank said.

The institution wants to “ensure that banks have enough capacity to start lending,” Omotola Abimbola, a banking analyst at Afrinvest West Africa Ltd., said by phone from Lagos, the nation’s commercial hub. “There are some assets banks have provided for, but have not written down, which is having an impact on their capital adequacy ratio.”

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