Nigeria’s public debt may exceed N183 trillion as President Bola Tinubu seeks approval for $24.14 billion in new loans from the National Assembly. The funds aim to support infrastructure and key sectors. Economists express concerns over debt sustainability and effective use of the borrowed money amid rising public discontent with government borrowing practices.
Nigeria is bracing for a potential massive increase in public debt, as President Bola Tinubu has requested approval from the National Assembly for approximately $24.14 billion in new foreign loans. If granted, this could escalate the nation’s total debt from about N144.67 trillion at the end of 2024 to over N182.91 trillion by 2026, due to the rising value of international debts when converted to naira at the official exchange rate.
The new loans break down into $21.54 billion, €2.19 billion, and ¥15 billion, totaling an estimated $24.14 billion. With current exchange rates, that converts to roughly ¥102 million and €2.5 billion in naira, bringing the total naira equivalent of these loans to around N38.24 trillion. This comes as Nigeria’s public debt has already ballooned by nearly 50% since 2023, leading to heightened fears over the nation’s fiscal health.
Data from the Debt Management Office shows that as of December 31, 2024, Nigeria’s public debt stood at N144.67 trillion. This marks a significant rise from N97.34 trillion at the close of 2023, driven by a combination of extensive domestic and external borrowing alongside a depreciating naira. Consequently, external debt surged to approximately N70.29 trillion by late 2024 from about N38.22 trillion the previous year.
Domestic debt saw a similar uptick, climbing from N59.12 trillion to N74.38 trillion over the same period, with the Federal Government responsible for over N70 trillion of the total debt. If approved, the new foreign loans would push Nigeria’s external debt close to $70 billion, representing a hefty 52.7% jump, intensifying existing worries about debt sustainability.
President Tinubu’s borrowing plan is part of a broader strategy intended to finance key infrastructure projects, agriculture, healthcare, education, and other vital sectors. He assured lawmakers that the proposed projects had undergone rigorous evaluations to ensure they would foster growth and public services.
In addition to the loan request, Tinubu is also pursuing a $2 billion bond program aimed at deepening Nigeria’s domestic financial market while raising funds to clear pension liabilities accrued to date. This bond issuance, however, could escalate the country’s debt service liabilities since repayments will be in foreign currency, adding further burden to Nigeria’s fiscal landscape.
Economists are sounding the alarm over Nigeria’s rising debt load. Experts emphasize the critical need for effective allocation of borrowed funds. Johnson Chukwu, CEO of Cowry Assets Management, stated that simply accumulating debt is not the problem—instead, it’s how the funds will be utilized that really matters.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, also expressed concerns, pointing out that excessive reliance on borrowing is crowding out essential government functions and warned that the debt servicing burden now exceeds capital expenditures. While new revenue strategies could alleviate some of these pressures, they demand careful scrutiny.
Reactions to Tinubu’s borrowing initiative have been largely critical, particularly from opposition parties like the Peoples Democratic Party (PDP). They argue that the president’s actions reflect a troubling lack of transparency about prior loans. Former Vice President Atiku Abubakar has echoed these concerns, demanding accountability for funds previously borrowed, emphasizing that there must be discernible results from these financial maneuvers.
Critics assert that the relentless cycle of borrowing without clear outcomes endangers Nigeria’s future, and there are calls for responsible fiscal strategies rather than accumulating more debt. Public sentiment leads to a consensus on the urgent need for better governance practices to avoid exacerbating the nation’s already challenging economic circumstances.
In light of President Bola Tinubu’s request for significant foreign loans, Nigeria is set to confront soaring public debt levels that raise numerous red flags. The proposed borrowing, if approved, could escalate national debt substantially while intensifying concerns over debt sustainability and the effective utilization of funds. Amidst growing criticism from economists and political opponents, the government is under pressure to ensure that any new borrowing aligns with transparent and growth-focused strategies, mitigating risks for future generations.
Original Source: punchng.com
