FG Defends $21.7bn Loan Plan, Says Projects Will Drive Growth
The Federal Government has defended its proposed $21.7bn external borrowing plan, arguing that the funds are intended to finance critical infrastructure, stimulate economic growth and improve living standards rather than merely increase the country’s debt burden.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stated this on Wednesday while briefing State House correspondents after the Federal Executive Council meeting presided over by President Bola Tinubu at the State House, Abuja.
Oyedele said the proposed financing covered 46 projects across 11 sectors, with 29 projects structured under concessional or blended financing arrangements.
He explained that the plan was a long-term investment framework spanning an average of five years and did not necessarily mean that the government would draw down the entire amount.
“First and foremost, this is a plan. It doesn’t even mean that we borrow all of it. So it’s a plan. The average lifespan of the project under this plan is five years,” he said.
According to the minister, transportation infrastructure accounts for approximately $10.6bn of the proposed financing, making it the largest sectoral allocation.
The projects include sections of the Lagos-Calabar and Sokoto-Badagry highways, as well as the Kano-Kaduna Metro Rail. He added that 10 flagship projects would consume $12.5bn, representing 58 per cent of the total proposed borrowing.
Oyedele said the social sectors, agriculture, energy, social protection, climate and education would receive a combined $4bn, to be financed entirely through concessional arrangements.
He disclosed that about $7.9bn would be sourced from multilateral and bilateral development partners, with the World Bank accounting for $5bn at an average interest rate of 2.1 per cent.
The remaining financing would come from regional development finance institutions, export credit agencies and commercial banks.
For the commercial component, the minister said the average indicative interest rate was 7.8 per cent, lower than the 9.1 to 9.6 per cent yields recorded on Nigeria’s November 2025 Eurobond.
He attributed the relatively favourable borrowing terms to credit rating improvements by Fitch, Moody’s and S&P.
States, agencies to receive $4.8bn
The minister further disclosed that $4.8bn of the proposed financing was earmarked for subnational governments and agencies, with $3.3bn allocated directly to states and approximately $1.45bn channelled through agencies and development finance institutions.
The institutions expected to benefit include the Bank of Industry, Development Bank of Nigeria, Transmission Company of Nigeria and electricity distribution companies.
Oyedele said the Federal Government served as the coordinating authority for external borrowing, stressing that the entire amount should not be regarded as money borrowed solely for federal government expenditure.
“The Federal Government has the constitutional duty to be the interface for all external borrowing. So when people say we are borrowing $21.7bn, they need to know that a significant chunk is for states, the FCT, and agencies, not for the Federal Government alone,” he said.
He defended borrowing as a legitimate financing instrument when the resources were channelled into productive investments capable of generating returns greater than their cost.
Drawing a comparison with private-sector investment, Oyedele cited the financing of the Dangote Refinery as an example of how borrowing could accelerate major projects.
“There are people who will tell you borrowing is bad. You just need to ask them: in which country on this planet do you run an economy without borrowing? To the extent that you borrow one naira to create value of more than one naira, you should please borrow more,” he said.
FG lists infrastructure projects approved by FEC
Oyedele also outlined four of the 10 memoranda he presented to the Federal Executive Council, all of which were approved.
The first was a €155.9m credit facility from Deutsche Bank and other lenders to upgrade 132/33kV substations under the first phase of the Presidential Power Initiative.
He said the intervention was expected to improve electricity supply to homes and businesses while reducing energy costs.
The second was a $970m syndicated term loan from Standard Chartered and the Africa Finance Corporation to finance rolling stock for the Karu-Maradi rail line.
According to the minister, the project would improve freight transportation, facilitate regional trade, strengthen the Northern Economic Corridor and reduce logistics costs.
The council also approved a €76.8m credit facility from the ECOWAS Bank for Investment and Development for Bauchi State’s Transport Infrastructure Development Programme.
The funding is expected to support rural and urban roads, including farm-to-market access routes aimed at improving agricultural distribution and food security.
The fourth approval concerned non-intrusive inspection scanners and related technical support, repairs and maintenance for the Nigeria Customs Service.
Oyedele said the equipment would facilitate faster cargo clearance, curb smuggling and misdeclaration, and improve the detection of contraband and small arms entering the country.
FG targets stable food prices by year-end
The minister said the Federal Executive Council had adopted food price stability as a priority, with the Federal Government working alongside state governments under a 90-day action plan coordinated through the National Economic Council.
He said the immediate objective was to prevent further increases in the prices of essential food items and, where possible, bring them down before the end of the year.
“The short term is to ensure that in the coming months, leading up to the end of the year, the price of the most important staple items, rice, yam, beans, maize, remains stable or comes down,” Oyedele said.
He explained that the government would assess the difference between domestic food production and consumption to determine the need for targeted imports.
According to him, only unprocessed brown rice would be imported under the proposed approach to protect local milling businesses and preserve domestic processing capacity.
Over the medium and long term, the government plans to expand irrigation farming, improve crop yields through scientific methods and reduce post-harvest losses.
Oyedele said the measures were intended to make food more affordable, strengthen domestic production and position Nigeria to export processed agricultural products.
“We will not only be food sufficient; prices will be stable and affordable, and we will export, and a lot of it will be processed before we export,” he said.
Minister cites economic indicators
Defending the administration’s economic policies, Oyedele compared Nigeria’s economic conditions in May 2023 with the indicators recorded under the Tinubu government.
He said inflation stood at 22.41 per cent when the administration took office, while net foreign reserves were approximately $859m, insufficient to cover one month of imports.
He also said the gap between the official and parallel foreign exchange markets exceeded 60 per cent, limiting access to foreign currency for businesses, including manufacturers.
According to the minister, the previous administration had printed more than N30tn, equivalent to over $20bn at the time, adding that the resulting inflationary pressures were still affecting the economy.
He further claimed that debt servicing consumed 97 per cent of government revenue, while about 27 states struggled to pay salaries and accumulated pension and gratuity arrears.
Oyedele argued that the economic reforms introduced by the Tinubu administration had helped avert a more severe economic crisis.
He said economic growth had increased from 2.74 per cent in May 2023 to 4.43 per cent in the second quarter of 2026, while growth measured in dollar terms reached 17 per cent in the first half of 2026.
“This is the reason why we are classified by the IMF as one of the top 10 countries in the world contributing to global GDP growth,” he said.
On inflation, the minister said the September 2026 rate stood at 14.63 per cent, compared with 20.98 per cent a year earlier and a peak of approximately 34 per cent during the period of heightened inflationary pressure.
He also reported that month-on-month food inflation had declined by 1.55 per cent, describing the development as a fall in food prices over the period.
Foreign reserves, he said, had risen to an 18-year high of more than $55bn, while net reserves exceeded $45bn, compared with less than $1bn three years earlier.
Oyedele added that the naira was trading within the range of N1,330 to N1,350 per dollar and expressed the view that the currency could appreciate further.
“Even the IMF estimates that the naira is about 25 per cent undervalued. So anybody who wants to bet against the naira should make provision for their losses,” he said.
He also disclosed that Nigeria’s tax-to-GDP ratio increased from about seven per cent in 2023 to approximately 12.5 per cent at the end of 2025.
The minister said the debt service-to-revenue ratio had declined from 97 per cent to below 60 per cent, while allocations from the Federation Account increased by 44 per cent between 2024 and 2025.
He projected a further 50 per cent increase in the allocations between 2025 and 2026.
Oyedele also cited credit rating upgrades by Fitch, Moody’s and S&P, alongside Nigeria’s exit from the Financial Action Task Force grey list and the European Union’s list of countries with strategic deficiencies, as signs of improved international confidence.
FG highlights social intervention programmes
Addressing concerns about the difference between improvements in macroeconomic indicators and the financial circumstances of ordinary Nigerians, Oyedele listed several government intervention programmes.
He said N372.6bn had been disbursed through the Nigerian Education Loan Fund to more than 1.5 million students to support their educational expenses.
He added that more than 10 million households had received cash transfers worth over N600bn, with the government targeting at least 15 million households.
According to the minister, more than 800,000 micro, small and medium-sized enterprises had also benefited from subsidised loans at single-digit interest rates, mainly through the Bank of Industry.
He said low-income earners earning up to N100,000 monthly had been exempted from personal income tax under the government’s tax framework.
Oyedele further stated that small businesses with annual turnover of not more than N100m, which he said represented about 97 per cent of more than 40 million small businesses, were exempted from corporate income tax, value-added tax obligations and withholding tax deductions.
He also noted that the capital market had expanded from approximately N30tn to more than N160tn in three years, adding that over 90 per cent of capital market investors were small investors who had benefited from capital gains tax exemptions.
FG traces petrol subsidy removal to 1973
On petrol subsidy removal, Oyedele traced the policy to 1973, when a litre of petrol sold for six kobo, compared with N195 when the subsidy was removed in 2023.
He said the price increase over the five decades had failed to resolve the underlying problems associated with the subsidy regime.
“Each time we increased the PMS price, Nigerian people suffered for it, but no benefit came. This is the first time in that half-century that the problem has now been solved, and the benefits are now accruing to our country,” he said.
The minister maintained that the removal of the subsidy had helped address longstanding fiscal challenges, although the policy has continued to affect household and business expenses.
He said the government intended to sustain fiscal discipline and improve economic conditions while pursuing its development agenda.
The Federal Executive Council, according to Oyedele, also resolved to target single-digit inflation by the end of 2027 or earlier, stabilise and reduce food prices, and maintain fiscal discipline through the election period.
Atiku, others criticise borrowing plan
The government’s defence comes amid criticism of President Tinubu’s request to the National Assembly for approval of the proposed external borrowing plan.
Former Vice-President Atiku Abubakar, the presidential candidate of the African Democratic Congress, and the Makinde/Daura Campaign Council are among those who have criticised the proposal.
Atiku had on Tuesday urged the National Assembly to suspend consideration of the request until the Federal Government publicly disclosed the projects for which the loans were intended.
The controversy centres on the scale of the proposed financing, the projects to be funded and the implications for Nigeria’s debt obligations.
While the Federal Government maintains that the plan is designed to finance long-term infrastructure and productive investments, critics have called for greater transparency and scrutiny before legislative approval.
