Reactions come as Edun says at World Economic Forum, ‘We’re going to rely less on borrowing’
Economists and financial analysts have lauded the Federal Government’s plan to cut down on borrowing while financing the 2026 budget deficit.
LEADERSHIP reports that the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, who announced the planned slowdown in borrowing, said Nigeria is looking to double down on revenue generation and reduce its exposure to borrowing to consolidate its fiscal reforms programme.
Speaking on Tuesday, on the sidelines of the World Economic Forum in Davos, Switzerland, Edun said the Federal Government is committed to reducing its reliance on borrowing while intensifying efforts to attract investment into the Nigerian economy.
“The issue now is to focus on revenue, focus on domestic resource mobilisation,” he said. “We’re hoping to rely less on borrowing.”
The minister’s remarks come as Nigeria implements fiscal reforms aimed at strengthening its economy. Edun emphasised the need to focus on revenue generation.
The minister added that while the country could access international bond markets if necessary, the government’s priority is to mobilise its own resources.
He outlined the government’s efforts to raise tax revenue and strengthen fiscal sustainability amid mounting global economic pressures.
Edun also highlighted strategies aimed at reducing borrowing while expanding revenue generation.
He stated that Nigeria remains open to international capital markets if needed, but domestic reforms are central to the government’s fiscal policy.
LEADERSHIP reports that since taking office in 2023, President Bola Tinubu’s administration has introduced several economic reforms to drive growth and stabilise public finances.
These measures include removing currency restrictions, ending a costly fuel subsidy, and overhauling the nation’s tax framework.
Other measures introduced by the FG include tax reforms aimed at raising revenue to 18 per cent of GDP next year, up from roughly 14 per cent currently.
The minister explained that the Federal Government’s policies target long-term economic sustainability while reducing reliance on external debt.
These initiatives, he emphasised, are part of broader efforts to modernise Nigeria’s economy and strengthen investor confidence.
Commenting on the development, the Chief Executive of CFG Advisory, Tilewa Adebajo, stressed the need for government to cut back on its borrowing, saying the country’s current debt profile is unsustainable. Nigeria’s public debt currently stands at over N152 trillion.
Adebajo said Nigeria’s debt profile, estimated at over $100 billion, poses a serious risk to macroeconomic stability, noting that the proposed 2026 budget provision of N15.52 trillion for debt servicing alone exceeds the combined allocations to security, defence, education and health, which stand at N14.97 trillion.
He advised that government reduce its ownership in joint venture assets, recommending a sell-down to at least 49 per cent of its interest in the 74 licensed concession assets.
According to him, this could raise as much as $50 billion to improve government revenues while also restructuring and recapitalising the balance sheet of the Nigerian National Petroleum Company Limited (NNPC).
“The government needs to sell down part of these assets and also consolidate all NNPC oil forward contracts into a structured debt instrument. This will make them easier to manage, improve transparency and accountability, and secure better financing rates.”
On his part, the Director and Chief Executive of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, emphasised the importance of accelerating commitment to fiscal consolidation.
“This initiative focuses on optimising government revenue without necessarily increasing the tax burden on citizens. Instead, it involves improving the efficiency of tax administration, which requires minimising leakages in government revenue and ensuring compliance.
“Embracing technological advancements, particularly in information technology (IT), can enhance the efficiency of tax processes and lead to better revenue outcomes through more accurate data tracking and tax collection methods.
“The core of the current tax reform initiative, therefore, aims at achieving these efficiencies rather than imposing new taxes,” he explained.
He added that another strategy involves leveraging private sector investment in public projects, saying: “As highlighted by the minister, there are numerous bankable projects that do not require government funding. Instead, the government can encourage private sector participation through public-private partnerships (PPPs).
“This approach allows private entities to invest their capital in initiatives where they are confident of receiving adequate returns. By facilitating the involvement of both domestic and foreign investors, the government can reduce its financial burden while still ensuring that critical infrastructure and projects are funded and developed.”
Yusuf pointed to the optimisation of government assets as a vital mechanism for generating additional revenue, saying: “Many government-owned assets are underperforming and, with proper management, could yield significantly higher returns. This includes assets in sectors such as oil and gas, real estate, and various state-owned enterprises that generate revenue even if they are not primarily classified as revenue-generating institutions.
“By optimising these assets, the government can tap into new revenue streams. Notably, some countries around the globe have successfully derived more income from non-tax sources than from traditional tax revenue, demonstrating the potential of leveraging state assets effectively.”
Despite acknowledging that the current debt level stands at approximately N152 trillion, Yusuf noted that exchange rate fluctuations, particularly the valuation of foreign debt when converted to naira, have intensified the debt situation.
“When the country transitioned to a market-determined exchange rate, the devaluation caused a significant increase in the debt reported in local currency terms,” he said.
On his part, the Head of Financial Institutions at Agusto & Co, Ayokunle Olubunmi, said the move could form part of the fiscal reforms the government is undertaking under the new tax laws that took effect this year.
Olubunmi noted that several new taxes have been introduced and that tax thresholds have also been raised in certain scenarios.
“Last year was relatively good for companies compared to prior years.
“Profitability was better than in previous years. So, company income tax is also expected to improve. There is also the expectation that crude oil production will increase. Nigeria is optimistic that crude oil prices will rise. These factors are expected to boost revenues and reduce the need for borrowing as well.
“What the government has also been trying to push, although it is unclear whether there will be significant traction in 2026, is an expansion of PPP projects, such that infrastructure projects will be largely funded through public-private partnerships. This has been ongoing for some time, but the jury is still out on whether there will be much traction in 2026.”
Points At Issue
1. Government’s Shift in Strategy: Finance Minister announced at Davos a focus on doubling revenue generation and domestic resource mobilisation to finance the 2026 budget deficit, reducing reliance on borrowing while keeping international bond markets as a backup option.
2. Key Fiscal Reforms Under Tinubu: Since 2023, reforms have included removing currency restrictions, ending fuel subsidies, and overhauling taxes to boost revenue to 18% of GDP in 2026 from 14% currently, aiming for long-term economic sustainability and investor confidence.
3. Current Debt Burden:
Nigeria’s public debt reached N152.40 trillion by June 30, 2025, up from N149.39 trillion in March 2025, equivalent to over $100 billion; debt service for 2026 is budgeted at N15.52 trillion, surpassing combined allocations for security, defence, education, and health (N14.97 trillion).
4. 2026 Debt Servicing and Deficit Projection Obligations
The 2026 budget deficit is projected at N20.10 trillion, representing 3.61 per cent of GDP. It is driven primarily by N15.91 trillion in debt service costs—nearly 30 per cent of total N54.43 trillion expenditure —exceeding combined allocations for security, defence, education, and health.
5. Experts Call for Asset Optimisation: Economic analysts have urged the selling down of government stakes in 74 joint venture assets (to 49 per cent) and consolidating NNPC oil contracts into structured debt, potentially raising $50 billion to improve revenues and NNPC’s balance sheet.
Credit: Leadership