BREAKING: Shock As Tinubu Borrows N96trn In 2 Years, Raises Nigeria’s Debt To N183trn
THE Bola Ahmed Tinubu administration has put Nigeria in huge debt as it has borrowed nearly N96 trillion in two years, sending shockwaves among citizens. He has submitted proposals at the National Assembly to borrow nearly N39 trillion from multilateral agencies in one fell swoop, taking the nation’s debt profile to nearly N183 trillion.
On Tuesday, Mr Tinubu sought the approval of Nigeria’s lawmakers to borrow $21.5 billion, €2.2 billion, and ¥15 billion. He also plans to take a grant totalling €65 million. Mr Tinubu also asked the National Assembly to sanction the issuance of domestic bonds worth N757.9 billion to settle outstanding pension liabilities.
Mr Tinubu said he was borrowing to fix “significant infrastructure deficit in the country,” noting that there was paucity of financial resources needed to address the gap in the face of a declining domestic demand. He said it had become essential to pursue prudent economic borrowing to close the financial shortfall.
Mr Tinubu further said that the borrowing was aimed at generating jobs, promoting skills acquisition, fostering entrepreneurship, reducing poverty and driving food security, while improving the livelihoods of Nigerians.
Tinubu’s debt is rising fast
Mr Tinubu’s debt is rising very fast. Economy Post reported last month that the president had borrowed N56.6 trillion in just 23 months. With the new N39 trillion planned by Mr Tinubu, the administration has now borrowed nearly N96 trillion in 2 years. Under President Tinubu, Nigeria’s public debt has jumped from N87.4 trillion as at June 2023 (one month after Mr Buhari’s exit from power) to nearly N183 trillion. The debt reached N144.67 trillion ($94.23 billion) in December 2024.
Mr Tinubu’s loans are now more than double of former President Muhammadu Buhari’s debt which stood at N75.26 trillion in the whole of 8 years. It is now the highest since 1999.
Naira devaluation impact
However, while Mr Tinubu’s debt has been monumental, the effect of naira devaluation cannot be ignored. President Tinubu has taken some external loans from the World Bank, the African Development Bank (AfDB) and other multilateral financial institutions. But that is at a time the naira exchange rate has weakened against other major currencies.
As at the time President Buhari was leaving power by late May 2023, the exchange rate was less than N800/$. Data from FMDQ Securities Exchange showed that the naira exchanged at 775 to a dollar on May 26, 2023. Mr Tinubu came to power on May 29, 2023. Hence some of former President Buhari’s external loans were taken when a dollar exchanged at less than N800.
However, President Tinubu has taken some of his loans at a point when the naira exchange rate is at over 1,500 to a dollar. The naira was quoted at 1,579.40/$ at the offficial market on Tuesday. It stood around 1,600/$ and 1,620/$ at the parallel market on May 27. In fact, the naira has weakened by over 70 percent since May 29, 2023, when Mr Tinubu came to power.
President Tinubu has removed petrol subsidies and subsequently floated the naira since 2023. Consequently, the price of petrol has skyrocketed from about N200 per litre to N875-N900 per litre, with the exchange rate weakening from less than N800 per dollar to over N1,500 per dollar.
“So, naturally, President Tinubu’s debt should be higher, given the disparities in the exchange rate over the period. If you use the parity rate for both debts, you will find that it won’t be as high as calculated,” explained a United Kingdom-based finance lecturer, Dr Matthew Onyemaechi.
“But what is certain is that President Tinubu is dangerously beginning to borrow because he does not believe he can raise sufficient revenue locally to finance projects.”
The foreign debt impact
Economists are worried that President Tinubu’s loans are all external, totalling $21.5 billion, €2.2 billion, and ¥15 billion. They say that the servicing cost would simply be humoungous. “The naira is devalued. So, when you take loans in currencies that are far stronger than yours, you pay more in your local currency and you also deplete your reserves. The naira, in turn, suffers,” said a Lagos-based economist, Mr Vincent Odinkalu.
Odinkalu’s assertion is true. If President Tinubu borrowed the same amount in 2020, he would, perhaps, repay half of the total loan in naira terms. The economist said the nation would dip its hands in the foreign reserves to repay and service the loans, expressing shock on President Tinubu’s level of borrowing while advising him to look inwardly.
“Domestic loans are far better, but the challenge is whether we can mobilise that amount of money locally. However, the president must look for ways to raise more revenues from local sources,” he added.
Tinubu’s win
The Tinubu’s administration recently repaid Nigeria’s $3.4 billion borrowed from the International Monetary Fund (IMF) . The actual name of the facility is the Rapid Financing Instrument (RFI), which was given to Nigeria in 2020 due to the impact of COVID-19 on oil prices. The cost of the loan was 1 percent.
This is a major win for the administration,, say economists.
