Many Nigerians have continued to express worries over the Federal Government’s borrowing, even as officials maintain that revenue generation has improved. The National Assembly recently approved President Bola Tinubu’s request to borrow N1.15 trillion from the domestic debt market to help finance part of the 2025 national budget deficit, raising questions about fiscal sustainability.
According to reports from the News Agency of Nigeria (NAN), the 2025 budget now provides for total government spending of N59.99 trillion, representing an increase of N5.25 trillion from the initial N54.74 trillion proposed by the Executive. The expansion widened the total budget deficit to N14.10 trillion, of which N12.95 trillion had previously been approved for borrowing.
Data from the Debt Management Office (DMO) showed that as of June 2025, Nigeria’s total public debt stood at N152.4 trillion, made up of N71.85 trillion in external debt and N80.55 trillion in domestic borrowing. The figures underscore the growing reliance on debt to fund government operations, a development that has sparked debate among policymakers, economists, and civil society groups.
Senator Olamilekan Adeola, Chairman of the Senate Committee on Appropriations, said most of the loan requests had already been included in the Medium-Term Expenditure Framework and the 2025 budget. “The borrowing is already embedded in the 2025 Appropriation Act. With this approval, we now have all revenue sources, including loans in place to fully fund the budget,” he said.
Senator Sani Musa, Chairman of the Senate Committee on Finance, argued that borrowing was consistent with global economic practices. “There is no economy that grows without borrowing. What we are doing is in line with global best practices,” he added.
However, some legislators and economic experts expressed caution. Senator Abdul Ningi said Nigerians deserved to know the specifics of the loans, including how the funds would be deployed and their expected impact on economic growth.
Experts warn that the government’s rising debt service burden could undermine fiscal sustainability. Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, noted that Nigeria’s debt servicing costs already outpace capital expenditure. “Debt service is already far more than the appropriation for capital spending, and the trend is worrying. We need to tread very cautiously with respect to debt commitments,” he said.
Yusuf further highlighted that more than 80 per cent of government revenue is now devoted to debt servicing. He explained that borrowing is being used mainly to fund consumption and recurrent expenditure rather than productive capital projects. “This path will only deepen the fiscal crisis if urgent reforms are not undertaken,” he warned.
Similarly, Vahyala Kwaga, Deputy Country Director at BudgIT, said the government’s plan to take on additional loans risks breaching Nigeria’s debt threshold. She called for greater transparency and accountability in how previous borrowing has been managed to ensure that debt remains sustainable.
Bismarck Rewane, CEO of Financial Derivatives Company, also cautioned that increased domestic borrowing could crowd out private investment. He explained that higher government borrowing could push up interest rates, reduce access to credit for businesses, and fuel inflationary pressures across the economy.
Despite these concerns, the DMO insists that Nigeria’s public debt remains manageable. Speaking at the recently held Nigerian Economic Summit in Abuja, the DMO Director-General, Patience Oniha, said the country’s debt-to-GDP ratio is currently about 40 per cent, well below the 70 per cent international benchmark for emerging economies. Oniha emphasized that Nigeria’s borrowing level is not excessive by global standards, despite growing public concern over debt accumulation.
The debate over government borrowing comes at a time of heightened public scrutiny, as Nigerians question whether increased revenue is sufficient to reduce reliance on debt or whether more stringent measures are needed to improve fiscal discipline. Analysts say careful monitoring and strategic allocation of borrowed funds are critical to ensure that new loans do not worsen the country’s debt profile or undermine economic growth.
