Section 42: Limits on consolidated debt of Federal, State and Local Governments.

(1) The President shall, within 90 days from the commencement of this Act and with advice from Minister of Finance subject to approval of National Assembly, set overall limits for the amounts of consolidated debt of the Federal, State and Local Governments pursuant to the provisions of items 7 and 50 of Part I of the Second Schedule to the Constitution and the limits and conditions approved by the National Assembly, shall be consistent with the rules set in this Act and with the fiscal policy objectives in the Medium Term-Fiscal Framework.
(2) Outstanding judgment debts not paid shall be considered part of the consolidated debts for the purpose of application of the respective limits set in pursuance of this section.
(3) For the purpose of verifying compliance with the limits specified pursuant to this section, the Commission shall, at the end of each quarter, determine the amount of the consolidated debt of each tier of government.
(4) The Commission shall publish, on a quarterly basis, a list of Governments in the Federation that have exceeded the limits of consolidated debt, indicating the amount by which the limit was exceeded.
(5) Where at the end of any quarter, the consolidated debt of the Federal, State or Local Governments exceeds the respective limits, it shall be brought within the limit not later than the end of the three subsequent quarters with a minimum of 25 per cent reduction in the first quarter.
(6) Violators of the limits specified pursuant to this section shall :
(a) be prohibited from borrowing from internal or external sources, except for the refinancing of existing debts ; and
(b) bring the debt within the established limit by restricting funding commitments accordingly.
(7) Where non-compliance with the limit specified pursuant to this section persists after the time limited by subsection (5) of this section, the affected tier of Government shall also be prohibited from receiving grants from any other Government in the Federation.
(8) Whenever the fundamentals of the proposals referred to in this section are changed due to economic instability or change in monetary or exchange policies, the President shall submit to the National Assembly a request for a review of the current limits.