November 17, (THEWILL) — Notable financial experts have warned that Nigeria’s debt service burden could worsen due to the Federal Government’s new borrowing plans.
According to the News Agency of Nigeria on Sunday, the experts include a former Director- General of the Lagos Chamber of Commerce and Industry, LCCI and currently Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf; the Chief Executive Officer, CEO, of Financial Derivatives Company, Bismarck Rewane and the Deputy Country Director at BudgIT, Vahyala Kwaga.
The alarm raised by the experts follows growing public concern over the Federal Government’s borrowing spree in spite of claims that revenue generation has increased, particularly with the National Assembly’s recent approval of President Bola Tinubu’s request to borrow N1.15 trillion from the domestic debt market to finance the 2025 budget deficit.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said that Nigeria’s rising debt service burden was already outpacing capital expenditure.
Yusuf said that it could begin to crowd out essential government functions if not properly managed.
He said that there was a need for the government to focus more on revenue growth and fiscal consolidation than piling on new debts.
“Debt servicing 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 said Nigeria was spending far beyond its means, with more than 80 per cent of government revenue now devoted to debt servicing.
According to him, the government is borrowing primarily 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 said.
For the Deputy Country Director at BudgIT, Vahyala Kwaga, the Federal Government’s plan to take on new loans risked breaching Nigeria’s debt threshold.
Kwaga said that the government needed to demonstrate far more transparency and accountability on how it had expended previous debts.
The Chief Executive Officer (CEO) of Financial Derivatives Company, Bismarck Rewane, said that increased domestic borrowing could crowd out private investment.
According to Rewane, the government’s rising appetite for local debt will push up interest rates and reduce access to credit for businesses.
Rewane also said that the borrowing spree may fuel inflationary pressures.
THEWILL recalls that government officials recently said revenue figures for 2025 show significant growth with N3.64 trillion in September 2025 and a total of N6.9 trillion generated in the first quarter of 2025. According to the Finance Ministry, “government’s 2025 ambitious revenue was N18.32 trillion based on its Appropriation Act, while the macro-economic forecast suggests an even higher expectation of N36.35 trillion.”
However, debt servicing in 2024 consumed 69 per cent of total government revenue and by the second quarter of 2025, recurrent debt had reached N3.69 trillion, overshooting projections by N1.63 trillion or 78.63 per cent.
Also, foreign debt servicing costs, fuelled by Naira depreciation, have increased, reaching N3.8 trillion as against a projection of N1.83 trillion.
Meanwhile, the National Assembly last week said that the 2025 budget provided for total expenditure of N59.99 trillion, an increase of N5.25 trillion from the initial N54.74tn proposed by the executive.
They said the expansion created a total budget deficit of N14.10 trillion, out of which N12.95 trillion had already been approved for borrowing.
According to the Chairman of the Senate Committee on Appropriations, Senator Olamilekan Adeola, most of the loan requests had already been factored into the Medium-Term Expenditure Framework and the 2025 budget.
“The borrowing is already embedded in the 2025 Appropriation Act,” Adeola said, adding that,” with this approval, we now have all revenue sources, including loans in place to fully fund the budget.”
Similarly, the Chairman of the Senate Committee on Finance, Senator Sani Musa, said that the borrowings aligned with global economic practices.
“There is no economy that grows without borrowing. What we are doing is in line with global best practices,” he said.
However, Senator Abdul Ningi said that Nigerians deserved to know the specifics of the loans and their intended impact.
Meanwhile, the DMO said that Nigeria’s public debt remained sustainable.
Speaking at the recently held Nigerian Economic Summit in Abuja, the Director-General of the DMO, Patience Oniha, said that the country’s debt-to-Gross Domestic Product ratio was currently about 40 per cent.
Oniha said that it was well below the 70 per cent international benchmark for emerging economies.
According to her, in spite of growing public concern about Nigeria’s debt profile, the country’s borrowing level is not excessive by global standards.
However, Data from the Debt Management Office (DMO) showed that as of June, Nigeria’s total public debt stood at N152.4 trillion, made up of N71.85 trillion external and N80.55 trillion domestic debt.
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