In a bold statement that has sparked significant debate among economists and policymakers, Wale Edun, Nigeria's Minister of Finance and Coordinating Minister of the Economy, has asserted that the country must continue to borrow in order to provide essential services to its citizens, despite the alarming total debt reaching approximately N134 trillion.
During a recent briefing following a Federal Executive Council (FEC) meeting, Edun emphasized the necessity of securing additional funds to support the government's budgetary needs and maintain public services. His remarks come on the heels of President Bola Ahmed Tinubu's request for parliamentary approval of a N1.77 trillion ($2.2 billion) external borrowing plan aimed at bolstering the 2024 budget.
Edun acknowledged the precarious state of Nigeria's finances, which have deteriorated significantly since Tinubu took office in May 2023. The total debt has surged from N87.3 trillion at that time to over N134 trillion, driven by increased government spending and economic challenges exacerbated by high inflation and currency devaluation.
“While we recognize the risks associated with our current debt levels, it is imperative that we secure additional resources to ensure that vital services are not compromised,” Edun stated. “Our focus is on creating a stable macroeconomic environment that encourages investment and fosters growth. Borrowing, when managed prudently, can be a tool for economic revitalization.”
Critics have raised concerns about Nigeria's escalating debt burden and its implications for future economic stability. The country is grappling with a debt-to-GDP ratio that has climbed to 55%, raising alarms about potential fiscal sustainability. Moreover, debt servicing costs have surged dramatically, accounting for a significant portion of government expenditure.
In response to these challenges, Edun outlined the government's strategy to enhance revenue collection through technological innovations and improved tax administration. He stressed the importance of diversifying revenue sources beyond oil and exploring opportunities in sectors such as agriculture and mining.
“Debt can be a double-edged sword,” Edun remarked. “While it can provide immediate relief and support for public services, we must also be vigilant in ensuring that our borrowing does not outpace our ability to repay. Our goal is to create an economy that is resilient and capable of supporting its citizens without becoming overly reliant on external financing.”