The Federal Government has defended its proposed $21.7 billion external borrowing plan amid criticism from former Vice President Atiku Abubakar and former Anambra State Governor Peter Obi, insisting that the funds are intended to finance infrastructure and other productive investments rather than government consumption.
The administration says the proposed financing will support major projects across transportation, healthcare, agriculture, energy, education, security, digital infrastructure and social protection, with the aim of strengthening Nigeria’s long-term economic growth.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, outlined the government’s position on Wednesday while briefing journalists after the Federal Executive Council (FEC) meeting presided over by President Bola Tinubu at the State House in Abuja.
Beyond the borrowing controversy, Oyedele announced that the government was targeting single-digit inflation by the end of 2027, citing improvements in several economic indicators, including foreign exchange reserves, economic growth and government revenue.
The administration also reaffirmed plans to present the 2027 Appropriation Bill to the National Assembly before the end of 2026.
The announcements come amid continuing debate over Nigeria’s economic reforms, rising living costs, public debt and the government’s ability to translate improved economic indicators into better living conditions for citizens.
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FG Explains Why It Wants to Borrow $21.7 Billion
Responding to criticism of the proposed external borrowing, Oyedele argued that the plan should be assessed according to the economic value of the projects it would finance rather than simply the amount it could add to Nigeria’s debt stock.
The proposed package comprises $20.52 billion and €1.045 billion, which the government estimates at approximately $21.7 billion when converted into a common currency.
The minister stressed that the proposal represents a financing plan and does not mean Nigeria has already borrowed the entire amount.
He also clarified that approval of the borrowing programme would not automatically require the government to draw down every proposed facility.
According to Oyedele, the financing is designed to support projects expected to generate long-term economic benefits, with an average implementation period of approximately five years.
He maintained that the government was seeking funding for investments capable of improving productivity, strengthening infrastructure and creating opportunities for economic expansion.
The minister’s response was aimed at addressing concerns over the scale of the proposed borrowing and the potential consequences for Nigeria’s public finances.
However, the ultimate impact of the plan will depend on the financing terms, the projects selected, implementation costs and the economic benefits generated by the investments.
Transportation Projects Account for $10.6 Billion
Transportation infrastructure represents the largest share of the proposed external financing, accounting for approximately $10.6 billion, according to Oyedele.
The projects include major road and railway developments intended to improve connectivity and support the movement of people and goods across the country.
Among the infrastructure initiatives mentioned by the minister are the Sokoto-Badagry Highway, the Lagos-Calabar Coastal Highway and the Kano-Kaduna railway.
These projects form part of the government’s broader infrastructure development agenda.
Improved transport links can help reduce travel times, connect commercial centres, facilitate the movement of agricultural produce and support trade between different regions.
However, major infrastructure projects also require substantial capital, effective procurement and consistent oversight to ensure that public investment delivers value.
Oyedele said the government was seeking support from multilateral and bilateral development partners to finance the proposed programme.
Approximately $7.9 billion is expected to come from development institutions, according to the minister.
He also disclosed that a $5 billion World Bank component would attract concessional financing at an average interest rate of about 2.1 per cent.
Some facilities intended for social-sector investments would carry interest rates of approximately two per cent.
The government argues that securing favourable financing terms is essential to limiting borrowing costs while providing resources for projects that may take several years to complete.
FG Targets Single-Digit Inflation by End of 2027
Another major announcement from the FEC briefing was the government’s intention to reduce inflation to single digits by the end of 2027.
Oyedele said inflation had declined to 14.63 per cent in September, compared with 20.98 per cent during the corresponding period of the previous year and a previous peak of approximately 34 per cent.
The figures were presented by the minister as evidence of progress in the administration’s efforts to stabilise the economy.
Despite the reported decline, inflation remains an important concern for households because increases in the prices of food, transportation, housing and other necessities can erode purchasing power.
The government said it would continue pursuing policies aimed at reducing price pressures, particularly those affecting food.
According to Oyedele, FEC resolved to sustain measures designed to moderate inflation while expanding investment in infrastructure, human capital development and employment creation.
Achieving single-digit inflation would represent a significant change in the pace of price increases.
However, lower inflation does not necessarily mean that prices will return to previous levels. It generally means that prices are rising more slowly.
The government’s ability to reach its target will depend on how economic conditions evolve and whether its policies can sustain price stability while supporting growth.
Foreign Reserves Rise Above $55 Billion
Oyedele also highlighted improvements in Nigeria’s external reserves, reporting that gross foreign exchange reserves had exceeded $55 billion.
He described the figure as the highest level recorded in 18 years.
The minister added that net foreign exchange reserves had risen above $45 billion, compared with less than $1 billion three years earlier.
Foreign exchange reserves are important because they provide a buffer that can help a country meet external payment obligations and manage periods of pressure on its currency.
Stronger reserves may also improve confidence in a country’s capacity to meet international financial commitments.
However, reserve levels are only one part of the broader economic picture. Exchange-rate stability, foreign currency demand, external debt obligations and the ability to generate sustainable foreign exchange earnings also matter.
The minister expressed optimism about the outlook for the naira, linking his assessment to stronger reserves and what he described as improving economic conditions.
The durability of those gains will depend on whether Nigeria can maintain reserve growth and strengthen the underlying sources of foreign exchange.
Economic Growth and Government Revenue Show Improvement, FG Says
The finance minister reported that Nigeria’s economic growth reached 4.43 per cent in the second quarter, compared with 2.74 per cent in May 2023.
He also disclosed that the country’s tax-to-GDP ratio increased from approximately seven per cent in 2023 to 12.5 per cent by the end of 2025.
According to Oyedele, the debt-service-to-revenue ratio declined from 97 per cent to below 60 per cent.
The government attributed these changes to improvements in fiscal management and the wider economic reform programme.
The debt-service-to-revenue ratio measures the share of government revenue used to meet debt obligations. A decline in the ratio can provide the government with more fiscal room for other spending priorities, although the overall level of debt and future repayment commitments remain important considerations.
Similarly, an increase in the tax-to-GDP ratio indicates that tax revenue represents a larger share of economic output.
The government has presented these indicators as evidence that its reforms are improving revenue mobilisation and fiscal capacity.
Nevertheless, economic growth and stronger government finances do not automatically translate into improved living standards for every household. Employment opportunities, real wages, food affordability and access to essential services remain important measures of economic performance.
FG Defends Petrol Subsidy Removal, Cites Social Support Programmes
Oyedele also defended the removal of petrol subsidies, arguing that the previous arrangement had placed an unsustainable burden on public finances without resolving the structural problems associated with the subsidy system.
He maintained that repeated increases in petrol prices over several decades had not addressed the underlying challenges.
According to the minister, the former subsidy regime limited the government’s capacity to invest in infrastructure and essential public services.
The removal of the subsidy has, however, contributed to concerns about higher transportation costs and the wider impact of economic reforms on household budgets.
In response to criticism over these pressures, the government pointed to several social intervention programmes intended to support vulnerable households, students and businesses.
Oyedele disclosed that more than 10 million households had received over ₦600 billion through cash transfers.
He also said the Nigerian Education Loan Fund had disbursed ₦372.6 billion to more than 1.5 million students.
In addition, over 800,000 micro, small and medium-sized enterprises were reported to have benefited from subsidised loans carrying single-digit interest rates.
The government says these programmes are intended to cushion the effects of economic reforms and provide support to groups facing financial difficulties.
The scale and effectiveness of such interventions ultimately depend on their coverage, delivery and ability to reach eligible beneficiaries.
Tax Reforms: Who Is Eligible for Exemptions?
The finance minister also outlined tax changes that he said were intended to ease the burden on individuals and businesses.
According to Oyedele, individuals earning up to ₦100,000 per month are exempt from personal income tax under the government’s reforms.
He further stated that qualifying businesses with annual turnover not exceeding ₦100 million enjoy exemptions from corporate income tax, value-added tax and withholding tax.
These measures were presented as part of efforts to improve the tax system while protecting lower-income earners and smaller businesses.
Tax exemptions can reduce compliance costs and leave individuals and businesses with more money available for household expenses, investment or expansion.
However, the application of any exemption depends on the relevant legal provisions, eligibility conditions and compliance requirements.
For businesses, the practical benefits may also depend on the nature of their operations and how the tax rules apply to their transactions.
The government has argued that its fiscal reforms are intended to improve revenue collection while making the tax system more supportive of economic activity.
Nigerian Capital Market Expands Beyond ₦160 Trillion
Oyedele also reported a significant expansion in the Nigerian capital market, saying its value had increased from approximately ₦30 trillion to more than ₦160 trillion.
He expressed optimism that stronger foreign exchange reserves and improving economic conditions could support the naira and investor confidence.
A growing capital market can provide businesses with opportunities to raise funds and give investors access to a wider range of investment instruments.
However, market capitalisation can change because of share-price movements, new listings and other market developments. It should therefore be considered alongside broader indicators of economic performance.
The minister’s comments formed part of the government’s wider defence of its economic programme and its argument that recent reforms are producing measurable results.
FG Plans to Present 2027 Budget Before End of 2026
Meanwhile, the Federal Government has reaffirmed its intention to submit the 2027 Appropriation Bill to the National Assembly before the end of this year.
Minister of State for Budget, Dr Doris Uzoka-Anite, disclosed the plan during the same briefing following the FEC meeting.
She said preparations for the 2027 budget were underway, with the administration aiming to present the proposal before the end of 2026.
The planned timeline is intended to give lawmakers an opportunity to examine the government’s fiscal proposals ahead of the 2027 financial year.
The budget will set out the administration’s spending priorities and provide a framework for allocating public resources across different sectors.
However, details of the proposed budget, including projected expenditure, revenue estimates, deficit financing and sectoral allocations, have not yet been announced.
The proposed external borrowing programme may also feature in the broader discussion of how the government intends to finance infrastructure and other development priorities.
What the Borrowing Plan Means for Nigerians
The Federal Government’s defence of its $21.7 billion borrowing plan rests on the argument that the funds will support productive investments capable of generating long-term economic benefits.
Transportation projects account for the largest stated share of the proposed financing, while other areas include healthcare, agriculture, energy, education, security and digital infrastructure.
At the same time, the administration has set a target of single-digit inflation by the end of 2027 and pointed to improvements in reserves, economic growth and revenue mobilisation.
These commitments will be closely linked to the government’s ability to manage public finances while responding to the economic pressures facing households and businesses.
The borrowing proposal is still a financing plan, rather than confirmation that the entire amount has already been obtained or will necessarily be drawn down.
Its eventual value to the economy will depend on the cost of borrowing, the quality of project selection, transparency in spending and the delivery of promised infrastructure and services.
For Nigerians, the central question is whether the proposed investments and economic reforms will translate into more reliable infrastructure, stronger employment opportunities, greater price stability and improved living standards.
The government’s stated objective is to use external financing to support long-term development while improving the country’s economic position. Whether that ambition is achieved will depend on implementation, fiscal discipline and the measurable results of the projects financed.
