The federal government has said that more than ₦40 trillion of the increase in Nigeria’s public debt since 2023 resulted from the revaluation of the country’s external debt following the sharp depreciation of the naira, rather than from new borrowing.
Minister of Finance and Coordinating Minister of the Economy Wale Edun made the clarification on Monday while briefing the Senate Committee on Finance on the state of the economy amid growing public concern over the pace of debt accumulation under President Bola Tinubu’s administration.
His remarks come against the backdrop of reports suggesting that the current administration borrowed about ₦80 trillion within its first three years in office.
According to the minister, such comparisons present an incomplete picture because they ignore the impact of exchange-rate movements on the naira value of Nigeria’s foreign debt.
“When this administration came into office, public debt was around ₦75 trillion. Many people simply compare that figure with today’s debt stock and conclude that this government has borrowed massively,” he said.
He explained that the liberalisation of the foreign exchange market and the subsequent depreciation of the naira significantly increased the domestic currency value of Nigeria’s external debt, even where the dollar-denominated obligations remained unchanged.
“Following the reforms and the depreciation of the naira, the foreign currency component of our public debt had to be revalued because Nigeria reports its debt in naira.
“That accounting adjustment alone added more than ₦40 trillion to the public debt figure,” Edun said.
He further disclosed that the securitisation of the Central Bank of Nigeria’s Ways and Means advances—approved by the National Assembly—added another about ₦33 trillion to the debt stock.
According to him, the amount did not represent fresh borrowing but rather the formal recognition of outstanding overdrafts previously extended by the apex bank to the federal government.
“This was not new borrowing. These were existing obligations that had to be converted into long-term debt in line with the law,” he added.
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Debt figures
Nigeria’s public debt has risen sharply over the past two years, driven by exchange-rate adjustments, fiscal financing needs and the formal recognition of previously outstanding liabilities.
Data from the Debt Management Office (DMO) show that total public debt stood at about ₦74.89 trillion at the end of June 2023. Following the naira’s depreciation after the unification of the foreign exchange market, the naira value of external debt increased substantially despite relatively modest changes in the country’s dollar-denominated debt.
The DMO has repeatedly noted that because Nigeria reports its debt stock in naira, fluctuations in the exchange rate automatically affect the reported value of external obligations when converted from foreign currencies.
The naira has weakened significantly since the foreign exchange reforms introduced in 2023, moving from around ₦460/$ under the previous managed exchange-rate regime to well above ₦1,500/$ at various points in the official market. This has dramatically inflated the naira equivalent of external loans owed to multilateral institutions, bilateral creditors and international bondholders.
Ways and Means explained
The minister also addressed concerns over the inclusion of Ways and Means advances in the debt stock.
The Ways and Means facility allows the Central Bank of Nigeria to provide temporary financing to the federal government to bridge short-term revenue shortfalls. However, the advances expanded significantly over several years, prompting concerns from economists and international financial institutions about fiscal discipline and inflationary pressures.
In 2023, the National Assembly approved the securitisation of about ₦22.7 trillion in outstanding Ways and Means advances, converting them into long-term debt instruments. Subsequent interest and related adjustments have further increased the recognised value of the obligation, contributing to the current debt stock.
Senate raises concerns
Despite the minister’s clarification on the composition of the debt, members of the Senate Committee on Finance expressed concern over the implementation of the capital component of the 2026 Appropriation Act.
Lawmakers questioned the pace of capital releases and project execution, warning that slow implementation could undermine infrastructure development, economic growth and job creation.
They urged the Ministry of Finance and other implementing agencies to accelerate the release of funds for critical capital projects while maintaining fiscal discipline.
Balancing reforms and debt sustainability
The federal government has consistently maintained that recent economic reforms—including the removal of the petrol subsidy, foreign exchange liberalisation and efforts to improve revenue mobilisation—are aimed at restoring macroeconomic stability and putting public finances on a more sustainable path.
Analysts, however, note that while exchange-rate revaluation explains a substantial portion of the increase in Nigeria’s debt stock, the country’s debt-service burden remains a major concern. They argue that sustaining fiscal reforms, expanding non-oil revenue, improving expenditure efficiency and accelerating economic growth will be critical to keeping public debt sustainable over the medium term.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X