President Bola Ahmed Tinubu has once again sought the Senate’s approval for another round of domestic borrowing — this time to the tune of N1.15 trillion — to finance the deficit in the proposed 2025 national budget. The request, officially conveyed to Senate President Godswill Akpabio and read during plenary on Tuesday, comes against the backdrop of mounting concerns over Nigeria’s escalating public debt and the sustainability of the administration’s fiscal strategy.
According to the President, the new loan is intended to “bridge the funding gap and ensure the full implementation of government programs and projects.” The Senate has referred the request to the Committee on Local and Foreign Debt for review, with a mandate to report back in one week.
However, beyond the legislative procedures and political formalities lies a deeper national conversation: What are the implications of the Tinubu administration’s frequent borrowings on Nigeria’s already fragile economy?
Nigeria’s Debt Profile: A Growing Burden
Nigeria’s public debt has witnessed a steep climb in recent years. According to the Debt Management Office (DMO), the country’s total public debt stood at over N97 trillion as of mid-2024, with a significant portion attributed to domestic borrowing. By 2025, analysts warn that debt servicing alone could consume more than 55% of government revenue, leaving fewer resources for infrastructure, social welfare, and economic development.
The Tinubu administration argues that borrowing is necessary to stimulate growth and stabilize the economy in the face of dwindling revenue, high inflation, and global economic uncertainty. However, critics question whether these loans are being channeled into productive ventures capable of generating future revenue to offset repayment obligations.
Impact On Inflation And Cost Of Living
Domestic borrowing often involves issuing government securities like bonds and treasury bills. When done excessively, such borrowing competes with the private sector for funds, crowding out businesses and driving up interest rates. This can stifle investment, limit business expansion, and ultimately contribute to job losses.
Additionally, Nigeria is currently grappling with high inflation, driven partly by the removal of fuel subsidies, exchange rate volatility, and supply chain challenges. Increased government borrowing may further weaken the naira and deepen inflationary pressures, worsening the already severe cost of living crisis for millions of Nigerians.
Strain On Future Generations
Borrowing, when not matched by corresponding economic growth, shifts the burden of repayment to future administrations — and by extension, future generations. The concern is that Nigeria may be accumulating debt with little tangible development to justify the liabilities being passed on.
Economists describe this pattern as “borrowing to consume rather than to produce.” In other words, loans are being used to fund recurrent expenditure rather than investments in sectors like agriculture, manufacturing, and technology that could stimulate productivity and economic diversification.
The Need For Fiscal Discipline And Revenue Expansion
To reduce dependency on debt, analysts have consistently advised the government to:
• Expand the tax net rather than increase tax rates
• Curb excessive government spending and wastage
• Strengthen economic diversification efforts
• Encourage private sector participation in infrastructure development
Nigeria’s vast potential — from solid minerals to renewable energy and digital services — remains underutilized. Without addressing structural weaknesses, borrowing may only serve as a temporary patch, not a long-term solution.
Conclusion
President Tinubu’s latest loan request underscores a recurring trend: the reliance on borrowed funds to sustain government operations. While borrowing in itself is not inherently problematic, its sustainability depends on whether the funds are invested wisely and whether the economy grows enough to offset the debt burden.
As the Senate Committee begins its review, many Nigerians will be watching closely — not just to see whether the loan is approved, but to understand whether there is a credible plan to ensure that borrowing today does not mortgage tomorrow.
Nigeria stands at a fiscal crossroads, and the decisions taken now will shape the nation’s economic trajectory for decades to come.
Dr. Olayinka Olatunbosun was the Labour Party Candidate in Ife East Local Government for the Osun State House of Assembly during the last general election in 2023.