Tinubu’s No-Loan Promise Contrasted as FG Borrows N1.15trn
Despite recent statement by President Bola Ahmed Tinubu that Nigeria had stopped taking domestic loans, the National Assembly yesterday approved a fresh request from the federal government to borrow N1.15 trillion from the domestic debt market to fund the deficit in the 2025 budget.
The approval followed the consideration and adoption of the reports by the Senate Committee on Local and Foreign Debt as well as that of the House Committee on Aids, Loans and Debts Management.
In the House, the committee’s chairman, Abubakar Hassan Nalaraba, while urging the lawmakers to approve the report, said the loan was to fund the deficit gap created by the increase in the budget size over and above the prior approved revenue and borrowing plans.
President Tinubu had earlier written to the National Assembly requesting the consideration and approval of the loan request.
The president, in his letter said, “I write to kindly request the approval of the National Assembly to establish a N1, 150,000,000.00 borrowing programme in the domestic debt market to close the unfunded deficit gap created by the increase in the budget size over and above the prior approved revenue and borrowing plans.
“This request is pursuant to the provisions of Section 44, Subsection 1 to 2 of the Fiscal Responsibility Act, FRA, of 2007, which requires the approval of the National Assembly for all new borrowings by the Federal Government of Nigeria.
“The Rt Honourable Speaker may wish to note that the National Assembly passed a budget of N54.9 trillion, an increase of N5.25 trillion from the N49.74 trillion budget proposal by the Executive. This increase created a budget deficit of N14 trillion.
“However, the proposed borrowing approved in the budget was N12.95 trillion, which caused an unfunded deficit of N1.1 trillion.
“It is, therefore, necessary to increase the domestic borrowing limit in the 2025 budget by N1.147 trillion to close this gap.
“Based on the foregoing, I wish to request the approval of the House for the establishment of a N1, 150,000,000 borrowing programme in the domestic debt market to close the unfunded 2025 budget deficit gap.”
The same letter was also read on the floor of the Senate by Senate President Godswill Akpabio.
President Tinubu had earlier in September stated that his administration had met its revenue target for the year, primarily from the non-oil sector.
The president also stated that the country is stabilised and the government no longer borrows money from domestic banks, adding that what the administration needs is to create jobs for the people.
He spoke when he hosted The Buhari Organization, TBO, made up of the defunct Congress for Progress Change (CPC), led by the former governor of Nasarawa State, Senator Umaru Tanko Al-Makura, who was on a visit to Aso Rock.
“First of all, we are fixing the economy, bringing hope to the people. That is what we are looking for. The economy is stabilised; nobody is trading a piece of paper for an exchange rate anymore.
“What we need now is building the ship, bedrooms for export and import to buy goods and create jobs for the people.
“There is a guarantee that I know, many of you have to suffer the initial abuse and the fear, where are we going? We know the direction we are heading, and we are moving upward.
“Those who may not know, now know, as I am standing before you, I can brag that Nigeria is no longer borrowing a dime from local banks.
“We have met our targets of revenue for the whole year, and we met it in August. I received it this morning. If non-oil revenue is doing well, then I have no fear of whatever Trump is doing on the other side.”
Current Debt Profile
As of June 30, 2025, Nigeria’s total public debt stock increased to N152.39 trillion, according to the Debt Management Office (DMO).
The new figure represented an increase of N3.01 trillion or 2.01 per cent from the N149.39 trillion recorded at the end of March 2025. In dollar terms, the debt profile rose from $97.24 billion to $99.66 billion, representing a 2.49 per cent increase within the three-month period.
Nigeria’s external debt stock increased to $46.98 billion (N71.85 trillion) in June 2025, compared to $45.98 billion (N70.63 trillion) in March.
According to the report, the World Bank remains Nigeria’s largest external creditor, with $18.04 billion in outstanding loans — mostly from the International Development Association (IDA). This accounts for about 38 per cent of the country’s total external obligations.
Overall, multilateral lenders accounted for $23.19 billion, representing 49.4 per cent of the external portfolio. Other multilateral partners include the African Development Bank (AfDB), International Monetary Fund (IMF), and the Islamic Development Bank (IsDB).
Bilateral loans totalled $6.20 billion, led by the Export-Import Bank of China (Exim Bank) with $4.91 billion, while smaller exposures were owed to France, Japan, India, and Germany.
Domestic Debt
On the domestic front, total debt climbed to N80.55 trillion in June, up from N78.76 trillion in March — an increase of N1.79 trillion or 2.27 per cent.
The report stated that N680,424,712,094.99 of FGN bonds issued to restructure states’ commercial debts is excluded from that amount. Also included under FGN Bonds was a securitized component of Ways and Means financing amounting to N22,719,000,000,000.00.
A portion of FGN Bonds issued in foreign currency (converted to naira) accounted for N1,402,905,358,752.50; this figure corresponds to a domestic US Dollar bond of USD 917.405 million, which the DMO notes was converted using a rate of N1,529.2105 per dollar.
Treasury Bills were the second largest instrument, amounting to N12,764,078,815,000.00, which is 16.67 per cent of the domestic debt stock.
Other instruments recorded in the DMO report include FGN Sukuk (N1,292,557,000,000.00, or 1.69 per cent), FGN Savings Bonds (N91,533,172,000.00, or 0.12 per cent), and FGN Green Bond (N62,355,000,000.00, or 0.08 per cent).
Promissory Notes (Pnotes), which are non-interest bearing, were reported at N1,731,358,298,643.85, forming 2.26 percent of total domestic debt. Of this amount, the naira-denominated portion was N431,216,797,437.00, while the foreign currency denominated portion (converted to naira) was N1,300,141,501,206.86. The foreign currency portion is composed of USD and GBP elements, converted at the rates of N1,529.2105 per dollar and N2,093.9479 per pound.
Specifically, the DMO noted that the FGN Naira Bonds figures include part of the N7.3 trillion Ways and Means restructured in the first half (H1) of 2025, and that the FGN US Dollar Bond of USD 917,405,000 issued on September 6, 2024 and outstanding as at June 2025 was converted to naira using the Central Bank of Nigeria official exchange rate of 1 USD = N1,529.2105 as at June 30, 2025.
The DMO stated that Promissory Notes which are non-interest bearing instruments and that the foreign-denominated Promissory Notes outstanding (USD 850,069,492 and £98,526 as at June 2025) were converted to naira using the CBN official exchange rates of 1 USD = N1,529.2105 and 1 GBP = N2,093.9479 as at June 30, 2025.
According to the DMO, the Federal Government accounted for N141.08 trillion, representing 92.6 per cent of the total public debt stock. This figure includes N64.49 trillion in external obligations and N76.59 trillion in domestic liabilities.
Subnational governments — comprising the 36 states and the Federal Capital Territory (FCT) — owed a combined N11.32 trillion, or 7.4 per cent of the total debt. Of this amount, $4.81 billion (N7.36 trillion) was external, while N3.96 trillion was domestic.
Our Debts Profile Unsustainable – Economists
Many economic analysts have expressed concerns over the increasing debt profile which they described as unsustainable. However, they also pointed out the fact that a large chunk of the loans, especially the external loans was driven by naira devaluation.
An economist and CEO, Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, said, “One important factor that amplified the debt number was the exchange rate. Because if you look at the totality of our debts in dollar terms, you will discover that the difference between where we were and where we are now is not that significant, but because of the naira depreciation, the dollar component of the debt has gone up by almost three times.
“We used the exchange rate of N450/$ before the coming of this administration to convert dollar debt; now we are using N1,540/$ to convert it; that is three times. So, the exchange rate factor is a very big factor in the growth of the debt. The only way to understand this is to look at the DMO figure and check the total debt in dollars.”
The Executive Director of the Centre for Fiscal Transparency and Public Integrity (CEPTI) Umar Yakubu noted that the sudden borrowing before the implementation of the 2025 capital budget is suspicious on the part of the government.
“The recent borrowing is quite suspicious because the government has not implemented any serious capital project this year and for them to borrow now in November domestically is ironic and questions the legitimacy of their statement of meeting revenue target.
“Recall they recently borrowed $2.1 billion with no reasonable explanation. This also questions our debt integrity system because when we borrow, we don’t even say what exactly we borrow for,” he said.
He also knocked the Senate for not carrying out due diligence whenever approving budgets by the National Assembly.
“The National Assembly doesn’t even scrutinise the borrowing documents and just approves them which is wrong. On the other hand the DMO which is supposed to push our debt integrity mechanism is not doing so,” he lamented.
An economist with Al-Hikmah University, Ilorin, Dr. Wasiu Olasunkanmi Lawal, expressed concern over the National Assembly’s latest loan approval, warning that Nigeria’s continuous borrowing without clear fiscal direction poses serious economic risks.
Speaking in an interview on Wednesday night, Dr. Lawal said Nigerians should be worried about the country’s debt profile.
“Economically, Nigerians should be worried. When fuel subsidy was removed, it was expected that the proceeds would help finance part of the government’s fiscal expenditures. Unfortunately, despite that, the government continues to borrow heavily,” he said.
The economist explained that borrowing in itself is not necessarily a problem, but the purpose and discipline behind it matter greatly.
“It is not a bad thing to borrow, but what are you borrowing for? Funds should be channelled toward productive infrastructure capable of recovering the amount borrowed. Borrowing for non-productive or vague purposes puts the country in serious jeopardy,” he noted.
According to him, “We are not seeing the impact of the subsidy removal proceeds, which were supposed to cushion fiscal challenges. Instead, there is continuous borrowing without visible outcomes. That’s why we are raising questions about Nigeria’s fiscal direction.”
Dr. Lawal lamented the lack of fiscal discipline in government, saying this has made borrowing a routine practice rather than a strategic tool for development.
“Nigeria lacks fiscal discipline. That is why loans are easily approved and disbursed without effective oversight. Institutions that should check these activities appear compromised. So, anything can be borrowed for, and nobody is held accountable,” he stated.
He argued that despite claims that subsidy removal has improved government revenue and solvency, Nigerians are not feeling the benefit.
“If we say we now have more money after subsidy removal, why are we still borrowing? Where is the money going? Nigerians have been buying petrol at high prices since 2023, yet there’s no visible fiscal balance.
“If the subsidy proceeds are not cushioning the effects of our fiscal deficit, then something is fundamentally wrong. The government must explain what has happened to those funds”, he stated.
He said the implications of the country’s rising debt are grave.
“Continuous borrowing means the future of the country is being mortgaged. The amount being borrowed today may not be repaid in several generations. Borrowing from the IMF or World Bank comes with conditions that tie down our economy,” he warned.
“Subsidy removal should have helped balance the fiscal deficit, but when the common man cannot feel its impact, it shows poor management and lack of transparency.”
Lawal criticized what he called the “unsustainable cost of governance”, saying government spending patterns contradict its claims of financial strain.
“You cannot say there is no money while the cost of governance keeps rising. Convoys, allowances, and recurrent expenditures are increasing. In a country where people are going hungry, this is unacceptable,” he said.
“If the government truly wants to ease the burden on citizens, it must reduce the cost of governance and demonstrate fiscal discipline.”
He also faulted the absence of what he called effective oversight and transparency in how loans and recovered funds are utilized.
“When the EFCC said it recovered N80 billion, where did that money go? We hear of recoveries, but there’s no transparency about how those funds are used. These are monies that could be channelled into education, healthcare, and social welfare,” he said.
“Institutions responsible for monitoring government borrowing and spending must be transparent. Without accountability, public funds will continue to be mismanaged.”
Dr. Lawal further warned that the country risks falling deeper into a “deficit trap”, as borrowing increasingly outpaces revenue generation.
“Nigeria is running on deficits. The government borrows to cover fiscal shortfalls year after year. How can we repay these debts when refineries are not functioning and our main source of revenue which is oil is underperforming?”
“The situation is like a vehicle being driven at night by a drunk driver with deflated tires and no headlights. That’s how confused the economic direction appears.”
He added that the political motivation behind some fiscal decisions ahead of 2027 could further worsen the economic outlook.
“Part of what is happening is political. The government is trying to satisfy everyone within its circle to secure political loyalty ahead of 2027. Institutions that should provide checks are now compromised, and nobody is questioning anything,” he said.
On what should be done, Dr. Lawal offered a three-point advice
“First, the government must drastically cut the cost of governance. Second, borrowing should only be done for projects that can generate twice the amount borrowed. There is a saying in economics parlance that if you can’t afford something twice, you shouldn’t buy it. And furthermore, there must be fiscal discipline and transparency in public finance management”, he added.
The don emphasised that unless fiscal prudence and institutional integrity are restored, the effects of borrowing and subsidy removal will continue to bypass the ordinary Nigerian.
“Borrowing is not the problem but mismanagement. Without fiscal discipline, transparency, and accountability, no amount of borrowing will improve the lives of ordinary Nigerians,” he submitted.