$21.7 billion loan will fund growth, productive assets, FG tells Atiku, Obi, other critics

Spread the word The Federal Government has defended its proposed $21.7 billion external borrowing plan, saying the funds will finance infrastructure and other productive investments that can expand the economy, create jobs and improve living standards.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the assets should judge the financing they would create and their expected economic returns, rather than judging it solely by its impact on Nigeria’s debt stock.

Fielding questions from State House correspondents after Federal Executive Council (FEC) meeting presided over by President Bola Tinubu at the Presidential Villa in Abuja, Oyedele also said the administration was targeting single-digit inflation by the end of 2027 or earlier.

His defence followed former Vice President Atiku Abubakar’s demand that the National Assembly withhold approval until the government publishes comprehensive details of the projects, contracts, financing terms and repayment obligations.

Presidential candidate of the NDC Mr Peter Obi has separately warned about Nigeria’s debt-servicing burden and its implications for spending on essential services.

Explaining the government’s position, Oyedele said the proposed facilities would support projects designed to strengthen national productivity and generate lasting economic value.

“This is investment, not borrowing,” he said.

He said the financing package comprises $20.52 billion and €1.045 billion for projects and programmes in transportation, security, healthcare, agriculture, energy, digital infrastructure, education and social protection.

He said transportation accounts for about $10.6 billion, covering projects including the Sokoto–Badagry and Lagos–Calabar highways and the Kano–Kaduna rail line.

Oyedele said the government was seeking financing from multilateral and bilateral development partners, along with other sources, while prioritising favourable terms to keep costs down.

He said approximately $7.9 billion was expected from multilateral and bilateral partners, with the World Bank among the major institutions providing support.

According to the minister, a $5 billion World Bank component would attract concessional financing at an average interest rate of about 2.1 per cent, while some social-sector facilities would carry rates of around two per cent.

On the economy, Oyedele said inflation had fallen to 14.63 per cent in September from 20.98 per cent in the same period last year and a peak of about 34 per cent.

He said FEC had resolved to intensify efforts to reduce prices, particularly food costs, while sustaining investment in infrastructure, human capital and job creation.

The minister said foreign reserves stood at more than $55 billion, the highest in 18 years. Net reserves, he added, had risen above $45 billion from less than $1 billion three years ago.

He said economic growth stood at 4.43 per cent in the second quarter, while the tax-to-GDP ratio had increased from about seven per cent in 2023 to 12.5 per cent by the end of 2025.

He said the debt-service-to-revenue ratio also fell from 97 per cent to below 60 per cent.

Defending the removal of petrol subsidies, Oyedele said the former arrangement imposed an unsustainable burden on public finances and limited investment in infrastructure and essential services.

He said the government had introduced interventions to cushion the effects of its reforms, including cash transfers, student financing and subsidised business loans.

He said more than 10 million households had received over ₦600 billion in cash transfers, while the Nigerian Education Loan Fund had disbursed ₦372.6 billion to more than 1.5 million students.

He said over 800,000 micro, small and medium-sized enterprises had benefited from loans at single-digit interest rates.

He said workers earning up to ₦100,000 monthly were exempt from personal income tax, while businesses with annual turnover of up to ₦100 million qualified for exemptions from corporate income tax, value-added tax and withholding tax under the relevant reforms.

The minister put the size of the Nigerian capital market at more than ₦160 trillion, up from about ₦30 trillion, and expressed optimism about the naira’s outlook, citing stronger reserves and improving economic fundamentals.

He said the government would continue to assess the effects of its policies and make necessary adjustments, with the ultimate goal of translating economic gains and public investment into better living conditions.