FG Moves to Refinance Expensive Debt
…Targets 7% GDP Growth By 2028
By Patience Ikpeme
The Federal Government has disclosed plans to refinance its high-interest debt portfolio as a key component of its economic strategy to reduce debt servicing costs and achieve a 7.0% annual Gross Domestic Product (GDP) growth rate by 2027/2028. The government sees this aggressive growth target as a means of “enabling removal of millions of our citizens from poverty.”
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, revealed the government’s financial and growth strategy on Tuesday at the 55th Annual Conference of the Institute of Chartered Accountants of Nigeria (ICAN) in Abuja.
The Minister stated that significant financial pressure from existing borrowings is driving the need for debt restructuring.
“Efforts are underway to refinance expensive debt and thus reduce both the debt service cost and the cost of borrowing,” Edun told the audience of financial experts.
The move is critical, as the nation’s debt obligations have surged. The Minister detailed the increases: “Debt service costs have surged: Treasury bill rates rose from 8% in 2023 to nearly 24%, and external debt service almost tripled from budgeted N2.7 trillion to N6.7 trillion in 2024.” Refinancing involves replacing current, high-interest loans with new ones on more favorable terms, aiming to lower the financial burden and free up capital.
The government’s new economic blueprint centers on stimulating output by leveraging private investment. The Minister articulated a fundamental shift in economic philosophy, stating: “Our growth strategy is centered on productive capital formation through increased private investment.”
The administration is moving towards an open, competitive, and efficient market structure. “We are transitioning to an economy, anchored on openness, competition, and efficiency, where the private sector is the engine of growth, and government efficiently plays its role as foreseer and enabler,” Edun confirmed.
This growth is also essential for closing a significant infrastructure gap, with the nation’s infrastructure stock currently at less than 40% of output, a figure the government aims to raise towards the global benchmark of 75%.
Recognizing the youthfulness of the population—with over 65% under the age of 35 years—the government is making bold moves in the digital economy. The Minister announced a major Public-Private Partnership (PPP) initiative to address infrastructure deficits.
“Through Project Bridge, a $2 billion PPP project supported by the World Bank and AfDB, we are expanding fibre optic coverage by 90,000 km, building on the existing 35,000 km network,” Edun disclosed. The ultimate goal is to achieve 70% nationwide internet penetration, reaching all Local Government Areas (LGAs) and administrative wards. This initiative is designed to “address digital infrastructure gaps and promote inclusion, especially for women and youth, paving the way for a tech-driven future.”
The Minister also noted a substantial improvement in government finances, attributing this to recent reforms. “Our fiscal position has improved significantly. Revenue has grown by over 70% in nominal terms** over the past two years, driven by: Liberalization of foreign exchange and fuel markets, Automation-led revenue collection under the Renewed Hope Agenda.”
To meet the increasing demand for development and reduce Multidimensional poverty, the administration is employing innovative domestic resource mobilization strategies amidst global liquidity constraints. These include formalizing the large informal sectors, such as real estate and agriculture, which was revealed in recent rebased GDP figures.
Other key fiscal initiatives include: Expanding the tax base through the Tax Reform Act, which “harmonizes processes and reduces multiple taxation to enhance productivity.” The government is also working to strengthen digital revenue collection platforms. Asset financialization by optimizing the federal government’s balance sheets, with the expectation that subnational governments will be encouraged to follow suit.
The government is also working to strengthen and expand its social investment programme using “enhanced digital identification systems, ensuring that support reaches those who need it most, efficiently and transparently.”
Concluding his address to the accountants, Minister Edun called on ICAN to be a partner in driving transparency: “As custodians of financial integrity, your role is pivotal in this reform journey. I urge ICAN to develop a transparent rating model for accounting firms, especially in tax audit, aligned with global standards, perhaps a ‘4-star to zero-star’ system that promotes accountability and excellence.”
