How Federal and State Government Loans Drive Nigeria’s Debt Upward

According to Bayo Onanuga, the media adviser to the president,

“Nigeria’s debt levels have skyrocketed as the value of the naira collapsed. That is why the government has taken action against Binance.”

Under Tinubu’s watch, Nigeria’s outstanding debt has increased by 24 trillion naira in three months to a staggering total of 121 trillion naira, according to the Debt Management Office.

In a tweet on Friday, Mr. Olusegun reacted to reports of Nigeria’s soaring debt levels and offered several explanations. He cited “the devaluation of the naira and high exchange rate” among others as reasons for the rise in Nigeria’s debt under Tinubu’s watch.

“The increase was mainly due to the devaluation of the naira, which reduced the total debt in dollar terms by $16.

77 billion or 18.34%.” In converting the external debt to naira, the authorities used the official exchange rate of ₦1,330/dollar, instead of ₦899.39 used for the debt conversion in December 2023,” Olusegun said. “The increase is therefore also due to the devaluation of the naira and the high exchange rate.”

According to Mr. Olusegun, the debt represents external and domestic loans from the Federal Government, the 36 state governments, and the Capital Territory. It is incorrect to attribute the debt solely to the FG. He further added that “we have securitized part of our N7.3 trillion revenue program with the Central Bank of Nigeria, but the naira was depreciating until Tinubu took office in May 2024, but after the president released the Nigerian currency, the naira lost astronomical value.”

Since Tinubu floated the naira, it has fallen from about 800 naira to the dollar to 1,500 naira to the dollar and at times nearly 2,000 naira to the dollar.

But the government has consistently blamed the naira’s collapse on the activities of cryptocurrency giant Binance and exchange operators, accusing them of aiding and abetting forex speculators.

“Look at what Binance is doing to our economy, that’s why the government has taken action against Binance,” said Bayo Onanuga, a media adviser to the president. “Some people are using cyberspace to determine our exchange rate, thereby hijacking the role of the CBN. They just sit back and decide what they want.”