Nigeria’s public debt is hurtling towards an unprecedented N180 trillion, a figure that starkly illustrates the dizzying pace at which the nation’s fiscal liabilities have ballooned.
This alarm bell rings even louder as President Bola Ahmed Tinubu formally seeks National Assembly approval for a staggering N34.15 trillion in fresh borrowings—N33.39 trillion in external loans and N757.9 billion in domestic bonds to plug pension shortfalls.
The sheer scale of this request, buttressed by detailed letters read during yesterday’s plenary sessions of both chambers, reveals an administration increasingly reliant on credit to bridge revenue deficits and fund ambitious development plans.
Such reliance on fresh borrowing is particularly contentious in light of Nigeria’s recent debt trajectory.
Public debt surged by 48.6 per cent year-on-year to N144.66 trillion at the end of 2024, from N97.34 trillion at the close of 2023, with the Federal Government shouldering 95 per cent of that load (approximately N137.28 trillion).
Add to this the N10.85 trillion of domestic obligations incurred between January and April 2025 alone, and the contours of a rapidly expanding debt profile emerge in stark relief.
Anatomy of the N34 Trillion Request
External Borrowing: Dollars, Euros, Yen—and Grants
President Tinubu’s letter to the Senate and House lays bare a multi-currency borrowing plan totalling USD 21.543 billion, EUR 2.194 billion, JPY 15 billion, plus a €65 million grant.
At the official rate of ₦1,590/USD, this equates to roughly ₦33.39 trillion in external debt.
The President underscores that these funds will target “infrastructure, agriculture, health, education, water supply, security and employment generation,” among other priorities.
Yet this grand vision collides head-on with the reality of an economy still reeling from fuel subsidy removal.
Tinubu himself concedes that “amid declining domestic demand” and an “infrastructure deficit,” prudent economic borrowing is imperative to close yawning financing gaps.
Critics, however, warn that additional foreign-denominated debt amplifies currency and refinancing risks, particularly when nearly 49 per cent of public debt already resides offshore.
Domestic Pension Bonds: A Stop-Gap or a Slippery Slope?
In a separate missive, the President seeks authority to issue ₦757.983 billion in federal bonds to settle chronic pension liabilities under the Contributory Pension Scheme (CPS).
The Pension Reform Act 2014 mandates timely payments, but successive revenue crunches have left retirees in limbo and arrears mounting.
Tinubu insists that bond issuance—already vetted by the Federal Executive Council on 4 February 2025—will “restore confidence in the pension industry” and “improve retirees’ welfare,” while “injecting liquidity into the economy”.
Yet issuing debt to pay off debt smacks of a fiscal workaround rather than a structural solution.
Pensions expert Olatunde Amolegbe cautions that, while such bonds may provide immediate relief, their recurrence underlines deeper revenue and governance failures:
“Borrowing in itself is not a problem as long as capacity to meet repayment obligations … is there. It is, however, important that we pay particular attention to application and usage of the loans.”)
Debt Service Strains: Revenue Outpaced by Obligations
Debt servicing has already gobbled up government coffers. In the first two months of 2025, the Federal Government spent ₦1.399 trillion on debt service—a 25 per cent increase year-on-year—while revenue rose by just 13 per cent to ₦1.067 trillion, pushing the debt-service-to-revenue ratio from 118 per cent in early 2024 to 131 per cent in 2025.
This ratio measures the share of revenue devoted solely to interest and principal payments; at 131 per cent, the Government is effectively borrowing to pay its creditors.
Such a ratio that exceeds 100 per cent is unsustainable. Former CIS President Olatunde Amolegbe warns of a looming liquidity crunch:
“It is well known that the budget deficit projected for 2025 needed to be covered … External loans come with exchange rate risks and have implications for fiscal space.”
Voices from the Frontline: Analysts Weigh In
Tunde Abidoye (FBNQuest): Highlights the scale of the new loan—almost half of Nigeria’s $45.8 billion external debt stock—and flags exchange-rate volatility and rising debt service costs as key concerns for the nation’s scant fiscal headroom.
Clifford Egbomeade (Economic Analyst): Suggests that, if deployed judiciously in productive sectors—agriculture, infrastructure, employment—the new borrowings could stimulate the economy. However, he insists “their success will largely depend on efficient use and whether tied to reforms that boost revenue and reduce waste”.
The Road Ahead: Reform or Ruin?
The Tinubu administration frames its borrowing proposal as a catalyst for development and poverty reduction. Yet, absent rigorous oversight and transparency, the cycle of borrowing to service debt risks tipping Nigeria into a debt trap.
The National Assembly’s Finance and Planning Committees now face a pivotal test: will they demand stringent conditionalities, real-time project audits and clear repayment roadmaps, or rubber-stamp yet another loan that may saddle future generations with perpetual liabilities?
In an era where global interest rates are on the rise and fiscal discipline is lauded more than debt proliferation, Nigeria’s path demands not just borrowing bravado, but hard-nosed reforms—broadening the tax base, stemming revenue leakages, and prioritising high-impact projects.
Only then can the nation avoid the precipice of a sovereign debt crisis, where every naira earned is gobbled up by bondholders rather than invested in schools, hospitals and roads.
Conclusion: A Moment of Truth
Nigeria stands at a crossroads. The Tinubu administration’s ₦34 trillion borrowing plea may offer a lifeline for stalled projects and beleaguered retirees, but it also magnifies the spectre of debt distress.
As lawmakers deliberate, the electorate must insist on accountability: robust benchmarks, periodic public disclosures and punitive measures for misallocated funds.
Failure to do so risks consigning Africa’s largest economy to a future defined not by growth, but by compounding interest payments and a hollowed-out treasury.
Additional reporting from Osaigbovo Okungbowa, Taiwo Adebowale and Peter Jene
