Institute Cautions Federal Government Against New Borrowing

The Chartered Institute of Treasury Management (CITM) has cautioned the Federal Government against new borrowing, saying such could plunge the country into debilitating debt.

Registrar of CITM, Mr Olumide Adedoyin gave the warning in a statement on Wednesday in Abuja against the backdrop of new borrowing and mounting debt by the federal government.

According to him, any new borrowing should be strictly for critical, revenue-generating infrastructure projects and should be on highly concessional low interest terms and long tenor from multilateral institutions.

“As at mid-2024, Nigeria’s debt picture is characterised by rapid growth, a changing composition, and significant fiscal pressures,” Adedoyin noted.

He, however, commended the Federal Government for the 2025 revenue surplus, describing it as an opportunity to fund transition without further debt.

According to him, the revenue surplus of 2025 should be seen as a golden opportunity to fund this transition without resorting to further debilitating debt.

“The Nigerian government is correct to celebrate improved revenue, as it is the primary tool to escape the debt trap.

“However, the Rt. Hon. Speaker Abbas Tajudeen warning is the necessary counterbalance, highlighting that the current debt level is unsustainable and threatens the nation’s economic future,” he noted.

Adedoyin stressed that the path forward was not through more borrowing, but radical fiscal discipline and aggressive revenue generation.

Others, according to him, include strategic management of existing debt and creating an environment where the private sector can drive growth.

In order to further halt borrowing, Adedoyin said the solution required a multi-pronged approach focused on radical increases in revenue and strategic debt management.

He said there was a need for aggressive revenue mobilisation, adding that the most important solution was to expand the tax net.

This, according to him, was by systematically bringing millions of informal sector businesses and high-net-worth individuals into the tax system through technology and data-driven approaches.

He added that there was a need to focus on taxing wealth and consumption, not just income, stressing that it was imperative to improve non-oil revenue.

Adedoyin listed these to include solid minerals, agriculture, and the digital economy, which he said must be prioritised to generate export earnings and taxes.

He also stressed the need for the Federal Government to ensure that the Nigerian National Petroleum Corporation (NNPC) Ltd. meets its full remittance obligations to the Federation Account, saying transparency in the oil sector was non-negotiable.

On debt restructuring, Adedoyin urged the Federal Government to proactively engage with bilateral and commercial creditors to restructure debt terms—extending tenors and lowering interest rates to ease the annual repayment burden.

He further called for a drastic reduction in government waste, corruption, and the bloated cost of governance, while urging the merger of redundant agencies and strict enforcement of the Fiscal Responsibility Act.

According to him, the saved subsidy funds must be channelled transparently into productive investments and targeted social safety nets, not absorbed into general spending.