Here are 7 reasons why Tinubu’s government continues borrowing despite exceeding revenue targets

• Higher government revenue does not automatically eliminate the need for borrowing.

• Finance Minister Taiwo Oyedele said borrowing is needed to fund budget gaps and support development projects.

• Government officials say loans are part of the approved budget plan.

• The government maintains that borrowing should be used productively and sustainably.

Nigeria has recorded improvements in revenue collection in recent years, with some government agencies exceeding their revenue targets. Yet, the Federal Government continues to borrow, raising questions among Nigerians about why more loans are still needed.

Many people have asked: If the government is generating more money, why does it still need to borrow?

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, explained that increased revenue does not mean the government no longer needs to borrow.

Speaking during discussions on Nigeria’s fiscal plans, Edun said borrowing remains necessary to fund the country’s budget and support economic development. He added that borrowing must be done productively, effectively and sustainably.

Here are seven reasons why the Federal Government continues to borrow despite improved revenue performance according to the minister.

One major reason is that the government’s planned expenses are still higher than the money it generates.

A budget deficit happens when government spending exceeds revenue. Borrowing helps cover this gap and allows the government to carry out planned programmes and projects.

For example, if a person earns more money than expected but still has major expenses like building a house or paying for a business expansion, they may still take a loan to cover the additional cost.

The government has said borrowing is needed to fund major development projects that require large amounts of money.

Projects such as roads, transportation, electricity, healthcare and other public infrastructure often require significant investment that cannot always be covered by yearly revenue alone.

According to government officials, borrowing can help speed up these projects while creating long-term economic benefits.

The minister explained that because Nigeria reports its total debt stock in Naira, the floating and devaluation of the local currency automatically increased the Naira-denominated value of pre-existing foreign debts.

Exchange-rate revaluation alone accounted for more than ₦40 trillion of the apparent increase in reported debt without the government taking on any new foreign loans.

Finance Minister Taiwo Oyedele said borrowing should be used in ways that strengthen the economy.

The government’s position is that loans should go into productive areas that can improve economic activity, create jobs and generate more revenue in the future.

The idea is that borrowed money should help create value rather than only fund consumption.

Government officials have explained that borrowing was included in Nigeria’s approved budget framework.

The Federal Government’s yearly budget is usually funded through a combination of revenue and borrowing, especially when there is a projected deficit.

This means higher-than-expected revenue does not automatically cancel borrowing plans already approved as part of the fiscal strategy.

RELATED: Nigeria needs more taxpayers, not higher taxes, says Finance Minister Taiwo Oyedele

A major portion of the debt surge resulted from bringing previously existing off-balance-sheet obligations onto official government records.

Following National Assembly approval, about ₦33 trillion in Central Bank "Ways and Means" overdrafts inherited from the previous administration was converted into formal long-term bonds, swelling the official debt stock without representing fresh borrowing.

Governments around the world borrow money to finance projects that provide benefits over many years.

The argument is that spreading the cost of major investments over time allows current generations to benefit from infrastructure and development while future revenues help repay the loans.

However, economists and citizens have continued to raise concerns about Nigeria’s debt levels, questioning whether borrowed funds are being used efficiently and whether the country can comfortably manage repayment obligations.

The Federal Government has maintained that borrowing is not the issue when properly managed, but that the focus should be on ensuring loans are used for productive investments that support economic growth.