The Federal Government of Nigeria has come under renewed scrutiny following concerns raised by Muhammadu Sanusi II over the country’s increasing debt profile despite the removal of fuel subsidy.
Speaking during a recent interview, Sanusi former Governor of the Central Bank of Nigeria questioned the rationale behind continued borrowing, particularly at a time when subsidy payments have been eliminated and fiscal savings are expected.
Sanusi acknowledged that the removal of fuel subsidy and the liberalisation of the foreign exchange regime were necessary economic reforms. However, he expressed concern that poor timing and lack of fiscal discipline could undermine the intended benefits of these policies.
He further criticised structural inefficiencies in Nigeria’s oil sector, highlighting the paradox of supporting foreign refineries while domestic refining capacity remained underutilised. Despite these concerns, he noted recent progress, pointing out that Nigeria has transitioned from being a net importer of petroleum products to an exporter, a development he described as positive for the economy.
Sanusi also warned that implementing exchange rate liberalisation in a loose monetary environment contributed to the rapid depreciation of the naira. He stressed that such reforms should have been sequenced alongside tighter monetary policies to stabilise the economy.
Central to his critique was the issue of rising public debt. Sanusi questioned why borrowing persists even after subsidy removal, stating, “If you’re not paying the subsidy and you’ve got the money, why are we still borrowing?”
Recent fiscal data indicates that Nigeria’s projected borrowing for 2026 has increased significantly, with the government also seeking additional external loans to fund infrastructure projects.
Sanusi concluded by calling for greater fiscal discipline, transparency, and accountability to ensure that economic reforms translate into tangible benefits for Nigerians.