Nigeria is borrowing to pay debts, Minister of Finance, Oyedele, explains the increase in the country’s debt

The Minister of Finance and Coordinating Minister for the Economy, Taiwo Oyedele, has explained that the sharp rise in the profile of Nigerian departments is largely due to the depreciation of the naira, and not necessarily due to new borrowings by the Federal Government.

Oyedele made the clarification on Monday while addressing the Senate committee on finance on the state of the country’s economy.

He also explained that most of the government’s domestic borrowings were used to refinance existing debt rather than accumulating new liabilities.

Responding to a question from Adamu Aliero, the senator representing Kebbi central, regarding the claim that the current administration has borrowed about N80 trillion in addition to the N75 trillion public debt it inherited, Oyedele explained that comparing the amount of national debt at the start of the administration with the current figure without taking into account exchange rate movements creates a misleading impression.

“When this government came into office, the public debt was about N75 trillion. Many people compared that figure with the current debt amount and concluded that the government had borrowed huge amounts,” he said.

“However, it is important to note that, following the reforms and the depreciation of the naira, the foreign currency component of our public debt must be revalued as Nigeria reports its debt in naira.

“That accounting adjustment alone adds more than N40 trillion to the public debt figure.”

The minister said the securitization of ways and means of advances inherited from the previous government also contributed significantly to the increase in debt stock.

“Another important factor is the securitization of the previous government’s ways and means of progress, which was approved by the national assembly,” he said.

“About N33 trillion was added to the public debt through the process. This is not new borrowing; it simply includes pre-existing obligations on the official debt books.

“These factors cannot always be explained precisely, which is why reported public debt appears much larger.

“The actual amount borrowed by this administration is far from what many people believe,” he said.

“Even for domestic loans, most of them are refinancing. The debt borrowed was previously due, and the government added new debt for refinancing. It’s not a new loan,” he said.

He said the Tinubu administration had adopted a prudent borrowing strategy that focused on infrastructure and long-term economic growth.

“This administration is very responsible in its borrowing. We understand the concerns of the Nigerian people and leading senators, but we remain fully committed to debt sustainability,” he said.

“We see debt as leverage. Every naira and every dollar borrowed should generate more value than the amount borrowed.”

During the session, Tahir Monguno, Senate chairman and senator representing northern Borno, and Aliero criticized the slow implementation of the capital component of the 2026 budget.

Monguno said failure to implement the capital budget is an impeachable offense.

However, Sani Musa, chairman of the Senate finance committee, assured lawmakers that implementation of the capital component of the budget would proceed quickly.