Labour Party's presidential candidate in the 2023 general election, Peter Obi, has expressed concern over the Nigerian Senate's approval of an additional $21 billion in external borrowing for the 2025-2026 fiscal cycle. According to Obi, this loan approval has pushed Nigeria's total debt to approximately N187 trillion, with fears that it might exceed N200 trillion by the end of 2025.
Obi's Key Concerns
- *Unsustainable Debt*: Obi believes the country's debt is accumulating at an exponential rate, with little to show for it in critical areas like education, healthcare, electricity generation, security, and poverty reduction.
- *Debt-to-GDP Ratio*: The government has borrowed nearly 70% of the previous GDP (N269.2 trillion) and about 50.16% of the new GDP (N372.8 trillion), resulting in the highest debt-to-GDP ratio in Nigeria's history.
- *Year-on-Year Increase*: The debt has increased by N27.72 trillion year-on-year and N4.72 trillion quarter-on-quarter, sparking concerns about the country's financial stability ¹.
Reactions from Other Parties
The African Democratic Congress (ADC) has also criticized the Tinubu administration's borrowing spree, describing it as "fiscal vandalism" that could plunge the country into a deeper debt crisis. According to the ADC, the government's borrowing has skyrocketed to N49.8 trillion per year, more than ten times what the previous administration borrowed annually ².
Implications of the Loan Approval
The loan approval has raised concerns about Nigeria's debt sustainability and fiscal management. Critics argue that the government is mortgaging the country's future without meaningful development or economic revival to justify the escalating debt. The ADC has demanded a comprehensive audit of all loans secured by the Federal Government over the past decade, emphasizing the need for transparency and accountability ³.
Conclusion
The debate surrounding Nigeria's borrowing strategy has intensified, with critics calling for responsible governance and meaningful economic reform. As the country's debt profile continues to rise, Nigerians are eagerly watching to see how the government will manage its finances and address the pressing issues facing the nation.
