Refinancing not fresh debt, FG sets record straight on public allegations

Nigeria's Finance Minister Taiwo Oyedele has defended the Federal Government's borrowing practices, asserting that the administration prioritizes responsible strategies focused on infrastructure development and debt sustainability.

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When this administration came into office, public debt was around ₦75 trillion. Many people simply compare that figure with today’s debt stock and conclude that this government has borrowed massively.

Responding to concerns about a substantial increase in public debt, Oyedele clarified that much of the reported rise stems from accounting adjustments. He explained that the foreign currency component of public debt was revalued due to the naira's depreciation, adding over 40 trillion naira to the debt stock. Additionally, the securitization of "Ways and Means" advances from the previous administration, totaling around 33 trillion naira, was brought onto official books without constituting new borrowing.

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However, it is important to note that, following the reforms and the depreciation of the naira, the foreign currency component of our public debt had to be revalued because Nigeria reports its debt in naira. That accounting adjustment alone added more than ₦40 trillion to the public debt figure.

Oyedele stated that these factors have been poorly communicated, leading to a public perception of significantly higher borrowing by the current administration than is accurate. He stressed that even domestic borrowing largely consists of refinancing maturing debts, which is standard practice and not indicative of new borrowing. The minister assured that the government remains committed to debt sustainability, viewing borrowed funds as leverage intended to generate more value than their cost.

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Another important factor is the securitisation of the Ways and Means advances from the previous administration, which the National Assembly approved. About ₦33 trillion was added to the public debt through that process. It was not new borrowing; it was simply bringing previously existing obligations onto the official debt books.