Why We Are Borrowing Despite Revenue Surplus – FG

The Federal Government has justified its decision to seek additional foreign loans, stating that borrowing remains essential to address the N9.7 trillion budget deficit, enhance infrastructure, and support the nation’s most vulnerable citizens. Despite some revenue-generating agencies surpassing their targets, loans are a necessary component of the 2024 Appropriation Act, according to key members of President Bola Tinubu’s economic team.

Finance Minister Wale Edun, Budget and Economic Planning Minister Atiku Bagudu, and Federal Inland Revenue Service (FIRS) Chairman Zacch Adedeji made these remarks during an interactive session on the 2025–2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) at the National Assembly. The session, organized by the National Assembly Joint Committees on Finance, National Planning, and Economic Affairs, sought to clarify the government’s fiscal strategy.

Responding to questions from Senator Adamu Aliero on the rationale for borrowing amid increased revenue, Adedeji explained that borrowing is embedded in the budget structure approved by the National Assembly. He noted that the budget includes both borrowing and internally generated revenue components, making loans vital for its implementation.

Edun and Bagudu further emphasized that borrowing is critical for funding programs and addressing the budget deficit. Bagudu cited the government’s long-term development goals, including achieving a Gross Domestic Product (GDP) per capita of $33,000 by 2050, as reasons for sustained investment in infrastructure and social programs.

Edun expressed confidence in the country’s economic trajectory, highlighting significant policy reforms under President Tinubu’s administration. These include market-based pricing for petroleum products and foreign exchange, which he said have sent positive signals to investors. He also pointed to the National Bureau of Statistics’ recent announcement of 3.46% GDP growth in the third quarter as evidence of economic progress.

The minister noted that for the first time in four decades, petroleum prices are determined by market forces, thanks to local refinery production. Similarly, foreign exchange allocation reforms have curtailed quick-profit opportunities from subsidized allocations by the Central Bank of Nigeria and the Nigerian National Petroleum Corporation Limited.

Edun acknowledged the challenges posed by high inflation but assured that targeted interventions are underway to cushion the impact on vulnerable citizens. These changes, he asserted, reflect a fundamental shift toward a more transparent and sustainable economic model.