Nigeria's Finance Minister: Debt rise driven by exchange rate, not new borrowing; tax revenue up 49%

Nigeria's Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has strongly defended the current administration's borrowing activities, countering public perception that the Federal Government has accumulated between N75 trillion and N80 trillion in debt. During an interactive session with the Senate Committee on Finance, Oyedele insisted that the actual borrowing by the Tinubu administration is significantly lower.

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For external loans, we always require the approval of the National Assembly. What usually happens is that once the National Assembly approves a borrowing plan, many people interpret that as money already borrowed. We have not even taken half of what the National Assembly approved.

Oyedele attributed the sharp increase in Nigeria's public debt not to new borrowing but to several key factors. He explained that over N40 trillion of the debt increase resulted from the revaluation of existing foreign debts due to the naira's depreciation following recent exchange rate reforms. Additionally, he stated that approximately N33 trillion arose from the securitization of 'Ways and Means' advances inherited from the previous administration, rather than new loans taken by the current government.

"The actual amount this administration has borrowed is nowhere near what many people believe," Oyedele asserted. He clarified that for external loans, the National Assembly's approval does not equate to money already borrowed, and the administration has not utilized even half of the approved borrowing plans. He further noted that much of the domestic borrowing involves refinancing maturing debts, which is standard practice and not indicative of new borrowing.

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The actual amount this administration has borrowed is nowhere near what many people believe.

Despite these explanations, senators raised concerns about the country's rising debt profile and weak budget implementation, even as they acknowledged improvements in revenue generation. The minister did disclose that the Federal Government generated N21.6 trillion in tax revenue between January and June, a 49% increase compared to the same period last year. However, he acknowledged that government expenditure continues to significantly exceed available revenues, contributing to the need for borrowing.

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Even for domestic borrowing, much of it is refinancing. Debt that was borrowed previously matures, and the government raises new debt to refinance it. That is not new borrowing.