FG Defends 2026 Borrowing Plan, Says Focus is on Inclusive Growth, Not Consumption

By Juliet Ezeh

The Federal Government has defended its 2026 borrowing strategy, insisting that the plan is designed to drive inclusive and sustainable growth, rather than merely increasing debt to fund recurrent expenditures.

This position was articulated by Mrs. Sanyade Okoli, Special Adviser to the President on Finance and Economy, during Proshare’s 6th Economist Conference, held virtually under the theme “Can Nigeria Fund Itself Without Killing Private Investment?”

Okoli stressed that the government’s fiscal strategy must be understood in the context of economic distortions inherited when the Tinubu administration took office nearly three years ago. “We had significant instability, including foreign exchange illiquidity, which deterred investment. The government’s early efforts focused on addressing these distortions and restoring stability,” she said.

She emphasised that the administration’s primary goal is inclusive growth that lifts citizens out of poverty, acknowledging that achieving this requires difficult trade-offs. “Borrowing is not about covering recurring costs; it is about investing in catalytic sectors that attract further private investment,” she noted.

On concerns about crowding out private capital, Okoli explained that the government is diversifying funding sources. “We are mindful of pressures on domestic liquidity. For instance, last year’s successful Eurobond issuance shows that we are not borrowing exclusively from the Nigerian market,” she said.

Regarding debt sustainability, Okoli highlighted progress in reducing fiscal pressures, noting that the debt service-to-revenue ratio has been significantly lowered compared with previous years. “We are working to bring debt to sustainable levels. This is a gradual process, but it is a top priority,” she added.

Okoli also defended the government’s asset optimisation strategy through the Ministry of Finance Incorporated (MOFI). She explained that assets have been catalogued, with strategies for holding, inviting private sector participation, or divestment transparently communicated on MOFI’s website. “This is not about backroom deals; it is about maximizing value from public assets,” she said.

Several market operators expressed caution regarding the scale and structure of borrowing. Johnson Chukwu, Group Managing Director of Cowry Assets Management, warned that debt service obligations could strain fiscal sustainability. “With nearly half of projected revenue going toward debt service, additional borrowing is a concern,” he said, advocating for concessions and structured private participation rather than outright sales of income-generating assets.

Dr. Ayo Teriba, Managing Director of Economic Associates, commended the administration for ending Ways and Means financing, but called for greater use of equity financing through the capital market. “Listing state-owned enterprises would reduce pressure on sovereign borrowing, allowing these companies to raise funds and repay independently,” he said.

Tilewa Adebajo, CEO of CFG Advisory, stressed the need for transparency and oversight in borrowing. “Current leverage would be considered high by any credit committee. We need accurate, up-to-date debt information and strong governance mechanisms to avoid potential crises,” he said.

From an academic perspective, Prof. Frances Obafemi of the University of Calabar noted that government borrowing is naturally crowding out private sector financing, as investors prefer lower-risk sovereign instruments. “Even if policy rates are lowered, private lending may not expand significantly if domestic funds are absorbed by government debt,” she explained.

The conference highlighted a critical shift in Nigeria’s funding conversation: from simply mobilising resources to raising funds in ways that do not suppress private investment, which is essential for long-term, sustainable economic growth.