Loans target infrastructure, not waste — Presidency fires back at Sanusi

In response to a query by the Emir of Kano, Muhammadu Sanusi II, the Presidency has stated that the Tinubu administration is borrowing to invest in the critical sectors of the economy, especially infrastructure.

Speaking during a News Central TV interview on Friday, Sanusi, who once headed the Central Bank of Nigeria (CBN), wondered why Nigeria is still borrowing despite the removal of fuel subsidy, reports The Guardian.

“Today, we have our own domestic refinery. We are no longer importing petroleum products; we are even exporting to Europe. That is positive for the economy,” he said.

He further stated, “Artificial exchange rates, especially when you’re printing money, cannot work. There was going to be a devaluation.”

“For me, removing subsidy or liberalising exchange rates, these are good interventions. Were they done at the right time? Those are certain questions. Were there other things that should be done that have not been done? These are other issues.

“Liberalising the exchange rate in a loose monetary environment contributed to the currency’s rapid depreciation.

“It’s not enough to say, oh, they removed subsidy. You had to. When you get to a point where 100% of your revenue goes into debt service, you cannot continue. Where is the money going to come from?

“However, if you decide to remove subsidy and liberalise exchange rates in an environment of very loose monetary conditions, before you have tightened money supply, the Naira drops into a bottomless pit. That was a timing issue.

“We’ve removed the subsidy. We’re now spending it. What we should not see is fiscal consolidation. You cannot remove wastages and continue borrowing. I’ve said this before. You need to see the benefits. If you’re not paying the subsidy and you’ve got the money, why are we still borrowing and borrowing? What are we borrowing for?”

In response, the Special Adviser to the President on Policy Communication, Daniel Bwala, revealed the aim of the loans taken by the Tinubu administration.

He wrote on X, “Your Royal Highness, we are simply borrowing to invest in the critical sectors of our economy, the chiefest of which is INFRASTRUCTURE. The infrastructure deficit requires a yearly investment of at least $30B-100B, and what we have is insufficient, hence the borrowing.“