FG justifies borrowing plan, says 10 states involved

The federal government Wednesday defended the proposed $24 billion borrowing, saying that the loan does not amount to an automatic increase in the nation’s debt burden.

In a statement justifying the plans, the Director of Information and Public Relations of the Federal Ministry of Finance, Mohammed Manga, noted that the nature of the rolling plan means that borrowings are split throughout the projects.

He stated that most projects in the 2024 – 2026 rolling plan have multi-year drawdowns of between five and seven years, which are project-tied loans.

The projects, he said, cut across critical sectors of the economy, including power grids and transmission lines, irrigation for improving food security, fibre optics network across the country, fighter jets for security, and rail and road infrastructure.

He added that the majority of the proposed borrowing will be sourced from Nigeria’s development partners, including the World Bank, African Development Bank, French Development Agency, European Investment Bank, JICA, China Eximbank, and the Islamic Development Bank.

The government hinted that the above institutions offer concessional financing with favourable terms and long repayment periods, thereby supporting Nigeria’s development objectives sustainably.

It averred that the borrowing plan is for both federal and several state governments across numerous geopolitical zones including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States.

“The borrowing plan does not equate to actual borrowing for the period. The actual borrowing for each year is contained in the yearly budget. In 2025, the external borrowing component is $1.23 billion, and it has not yet been drawn. This is planned for H2 2025,” he said.

Defending the rising profile of the country, the government reiterated that the debt service to revenue ratio has started decreasing from its peak of over 90 per cent in 2023.