ABUJA, Nigeria – In a move stirring national debate, President Bola Tinubu has proposed a substantial $26 billion borrowing plan for 2025–2026, prompting cautionary notes from the International Monetary Fund (IMF) and financial analysts.
Key Takeaways:
- President Tinubu seeks $21.5 billion in external loans, supplemented by €2.2 billion, ¥15 billion, and $2 billion in domestic borrowing, totaling approximately $26 billion.
- The IMF and financial experts express concerns over Nigeria’s escalating debt, emphasizing the need for prudent fiscal management.
- Analysts highlight that around 60% of the proposed 2025 budget would be financed through new borrowings, raising sustainability questions.
- Despite a recent decrease in national debt figures, primarily due to naira devaluation, debt servicing costs remain high.
- Critics urge the government to explore alternative revenue sources and reduce reliance on borrowing to fund recurring expenditures.
The Full Story
President Bola Tinubu’s administration has submitted a request to the National Assembly for approval of a comprehensive borrowing plan amounting to approximately $26 billion. This includes $21.5 billion in external loans, €2.2 billion, ¥15 billion, and an additional $2 billion in domestic borrowing. The funds are intended to address budget shortfalls and stimulate economic growth across sectors such as infrastructure, health, education, and agriculture.
However, the IMF and financial analysts have raised concerns about the sustainability of Nigeria’s debt trajectory. Cowry Asset Management analysts noted that approximately 60% of the 2025 budget would rely on new borrowings, marking a shift from earlier commitments to reduce debt dependence through foreign direct investment and equity financing. They cautioned that a significant portion of the funds might be allocated to recurring expenditures, potentially limiting long-term revenue generation.
The IMF emphasized the importance of reducing public debt and rebuilding fiscal buffers through credible medium-term plans, highlighting the need for macroeconomic stability and targeted growth policies.
Despite a reported decrease in national debt from $108.23 billion to $94.23 billion as of December 2024, this reduction is attributed mainly to the devaluation of the naira rather than actual debt repayments.
Critics argue that continued borrowing without substantial reforms may lead to fiscal instability. Professor Christopher Chinedumuije, an expert in disaster management and humanitarian studies, warned that Nigeria’s dependence on borrowing to fund governance is fiscally irresponsible and economically unjust. He urged the government to explore alternative revenue sources and reduce reliance on debt to finance recurring expenditures.
Video Coverage:
For a detailed analysis of Nigeria’s borrowing plans and expert opinions, watch the following video:
Public Reactions on X (Twitter):
@NaijaEconomist: “Another loan? We’re already struggling with debt servicing. This isn’t sustainable.”
@LagosAnalyst: “60% of the budget funded by new borrowings? We need to rethink our fiscal strategy.”
@AbujaCitizen: “Investing in infrastructure is good, but at what cost? Future generations will bear this burden.”
@FinanceGuruNG: “Debt can be a tool for growth, but only if managed wisely. Transparency is key.“
@YouthVoiceNG: “Our leaders need to prioritize creating sustainable revenue streams over accumulating debt.”
President Tinubu’s proposed $26 billion borrowing plan has sparked significant debate among financial experts, international institutions, and the Nigerian public. While the government aims to stimulate economic growth and address budget deficits, concerns about debt sustainability and fiscal responsibility remain at the forefront. As Nigeria navigates its economic future, balancing development needs with prudent financial management will be crucial.
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Source: Legit.ng
