President Bola Tinubu announced that the federal government has successfully cleared over N30 trillion in debt incurred through "ways and means" advances.
He made this statement on Tuesday while addressing the nation during Nigeria’s 64th Independence Day celebration.
“Ways and means” refers to a loan facility provided by the Central Bank of Nigeria (CBN) to help the government cover short-term budget gaps.
Earlier this year, the national assembly approved the securitisation of N22.7 trillion requested by former President Muhammadu Buhari, and another N7.3 trillion requested by Tinubu himself. This approval allowed the government to convert the debt into longer-term bonds to manage repayment.
Despite these measures, Nigeria's public debt rose to N121.67 trillion in the first quarter of 2024. According to the Debt Management Office (DMO), the increase in public debt was partly due to borrowing and ways and means advances.
Finance Minister Wale Edun noted that the government is no longer relying on ways and means to fund external debt service or other liabilities.
While giving his speech, Tinubu explained that there has been a gradual reduction in the debt service ratio from 97 percent to 68 percent.
“We have cleared over N30 trillion in ways and means debt. We have also reduced the debt service ratio significantly,” Tinubu said.
He added that his administration has managed to clear the foreign exchange (FX) backlog of $7 billion, raise Nigeria’s foreign reserves to $37 billion, and pay outstanding bills, despite inheriting just over $33 billion in foreign reserves 16 months ago.
Economic Reforms Underway
Tinubu emphasized that the economy is undergoing major reforms to correct the fiscal imbalances caused by a high debt-to-GDP ratio.
“Our economy is currently undergoing necessary reforms to make it more sustainable. If we don’t address these fiscal misalignments, our country could face an uncertain future,” he said.
He assured Nigerians that the government is committed to a free-market economy, supporting investment while maintaining strong regulatory oversight.
“This commitment is guiding our reforms in the upstream petroleum sector, where we aim to increase oil and gas production, boosting the overall economy,” Tinubu explained.
The president also noted that the Central Bank’s more disciplined approach to monetary policy has brought stability to the foreign exchange market.
New Policies for Economic Stability
In his speech, Tinubu mentioned the recent approval of economic stabilisation bills aimed at creating a more business-friendly environment in Nigeria. He expressed optimism that these bills would encourage investment and reduce the tax burden on businesses and workers.
“Our fiscal policy reforms, such as the economic stabilisation bills, will attract investments and make the business environment more competitive. Once passed into law, they will reduce the tax burden on both businesses and workers,” he concluded.
The president’s remarks come at a time when Nigeria is grappling with economic challenges and working toward sustainable growth and development.
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