Why we are taking more loans ispite of increased revenue generation – Federal Govt

The Federal Government has reiterated its rationale for pursuing further foreign loans, asserting that they are a key element of the 2024 Appropriation Act.

Officials have highlighted that these loans are crucial for bridging the N9.7 trillion budget deficit, while also helping to advance infrastructure projects and support the country’s most disadvantaged citizens.

During an interactive session on the 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), held at the National Assembly in Abuja, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, Budget and Economic Planning Minister, Atiku Bagudu, and Federal Inland Revenue Service (FIRS) Chairman, Zacch Adedeji, outlined the rationale behind the borrowing strategy.

The session was organized by the National Assembly Joint Committees on Finance, National Planning, and Economic Affairs.

The discussion followed President Bola Tinubu’s request to the National Assembly for approval to borrow $2.209 billion, which was raised in two separate letters.

The officials’ explanation came in response to a query from Senator Adamu Aliero, who questioned why the government was pursuing additional loans when its revenue-generating agencies had exceeded their targets for the year.

In his response, Adedeji clarified that meeting revenue targets does not eliminate the need for borrowing. “The fact that we meet revenue targets does not mean we should not borrow,” he explained. “Our budget includes both a borrowing component and an internally generated revenue component. It’s a complete package, and the borrowing target is part of the budget approved by the National Assembly.”

Edun and Bagudu further supported the argument, explaining that despite some agencies exceeding their revenue targets, borrowing remains essential for the proper financing of the budget and the achievement of its broader economic objectives.

Bagudu said: “Despite surpassing revenue targets by some of the revenue generating agencies, the government still needs to borrow for proper funding of the budget, particularly in the area of deficit and provision for the poorest and most vulnerable.

“We have a long-term development agenda 2050 aiming at GDP (Gross Domestic Product) per capital of $33,000.”

Edun expressed confidence in Nigeria’s economic prospects, pointing to a carefully planned budget for 2025 as a key driver. He noted that under President Tinubu’s leadership, the country has undergone significant changes.

The minister underscored the critical role of market-driven pricing for petroleum products and foreign exchange, stating that these reforms have sent positive signals to investors.

“Just today (yesterday), the National Bureau of Statistics (NBS) announced that GDP growth in the third quarter was 3.46 percent, let’s say, for the sake of round numbers, 3.5 percent.

“That means that the GDP per capital is increasing. The economy is moving in the right direction.

“Inflation is too high and that is why interventions are being made particularly for the most vulnerable.

“Let me just summarise the change by saying that in Nigeria, for the first time in four decades, we have market prices of petroleum products being determined by market forces because of the local refinery which is not only producing Premium Motor Spirit (petrol), but also diesel and Jet A1 (Aviation fuel). It is also producing raw materials for industries and agriculture.

“In addition, we have market pricing of foreign exchange.

“For the first time in 40 years, no Nigerian can wake up and think that his way to fortune and the quickest path he can take to getting rich is by getting an allocation of foreign exchange from the Central Bank of Nigeria (CBN).

“Likewise, no Nigerian can wake up and feel that his quickest path to riches is to look for a subsidised allocation from the Nigerian National Petroleum Corporation Limited (NNPCL) and make money.”