FG defends N11.9tn borrowing as fiscal pressures deepen

Federal Government borrowed an additional N11.9 trillion between June 2023 and December 2025 as expenditure outpaced the fiscal resources generated by its economic reforms.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed the figures while presenting the government’s reform scorecard.

According to him, the Federal Government secured N20.4 trillion in incremental resources from its share of petrol subsidy savings, higher independent revenues and additional borrowing during the period. Incremental federal expenditure, however, reached N30.64 trillion.

Oyedele said the N11.9 trillion borrowed would have been considerably higher and potentially destabilising without the fiscal space created by the removal of the petrol subsidy and liberalisation of the foreign exchange market.

Of the additional expenditure, N9.39 trillion went to minimum-wage increases, salary adjustments and allowances for federal workers.

The minister said subsidy removal mobilised about N15.8 trillion for the federation between June 2023 and December 2025. Rather than appearing as a separate payment into the Federation Account, the savings were reflected in higher distributable revenue.

Federal Government received N5.4 trillion of the amount, while states and local governments shared N10.4 trillion. Federal independent revenue also increased by N3.1 trillion, driven largely by higher surpluses and remittances from government-owned enterprises.

Oyedele attributed part of the revenue increase to the weaker naira, which raised the domestic-currency value of dollar-denominated customs duties and petroleum profit taxes.

He also defended the exchange-rate liberalisation, arguing that the previous system amounted to an implicit foreign-exchange subsidy that disproportionately benefited rent seekers rather than manufacturers and ordinary Nigerians.

Nevertheless, the figures raise questions about whether the reforms have produced sufficient fiscal relief. CFG Advisory previously warned that rising debt-servicing obligations had absorbed much of the savings from subsidy removal, restricting the government’s capacity to finance infrastructure and social programmes.

The reforms have also imposed heavy costs on Nigerians through higher petrol prices, transportation expenses, inflation and the sharp depreciation of the naira. Government must therefore demonstrate, through transparent accounts and visible public projects, how the savings and additional borrowing have improved citizens’ lives.