Nigeria's Debt Dilemma: Tinubu's Borrowing Spree Raises Questions
Nigeria's debt crisis is reaching new heights, with President Bola Tinubu's recent loan requests sparking intense debate. Just six days after securing a $2.3 billion external loan, Tinubu has asked the Senate to approve a staggering N1.150 trillion loan, further burdening the nation's finances.
The Senate President, Godswill Akpabio, revealed the president's request during a plenary session. Tinubu's letter explained that this loan would be sourced from the domestic debt market to fund the 2025 budget, which has seen a significant size increase.
But here's where it gets controversial: Tinubu's administration justifies these loans as necessary for development, citing dwindling domestic funding sources. However, Nigeria's public debt has been steadily rising, reaching a whopping N144.7 trillion as of December 2024, with domestic debt making up 51.4% of the total. And this is the part most people miss: the government's reliance on borrowing has led to a surge in debt servicing costs, with Nigeria spending N13.12 trillion in 2024, a 68% increase from the previous year.
The impact? Less money for critical sectors like infrastructure and social services, potentially stunting economic growth. Despite the fiscal strain, Tinubu stands firm, arguing that borrowing is essential for development, especially with the government's ambitious infrastructure plans.
The president's borrowing strategy has been a topic of contention. In a media chat, Tinubu defended his approach, stating that borrowing is not criminal and that it's necessary for infrastructural development. However, critics argue that the country's debt burden is becoming unsustainable, especially with the rising cost of servicing these loans.
Adding to the complexity, Nigeria is currently operating two budgets within one fiscal year, including the 2025 budget of N54.2 trillion. This dual budget system has led to complaints from government agencies about insufficient funds for project execution. With rumors of potential budget extensions, the financial situation appears even more uncertain.
As Tinubu's administration continues to borrow, the question remains: How will Nigeria manage its growing debt and ensure economic stability? The debate is open, and the public's input is crucial. Is the government's borrowing strategy a necessary evil or a path to economic peril? Share your thoughts in the comments below.
