Why Borrowing Persists Despite Subsidy Removal — Sanusi Queries FG’s Fiscal Strategy

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The Emir of Kano, Muhammadu Sanusi II, has raised concerns over Nigeria’s rising debt profile, questioning why the Federal Government continues to borrow despite the removal of petrol subsidies.

Speaking in an interview with News Central TV on Friday, the former Governor of the Central Bank of Nigeria acknowledged that scrapping fuel subsidies and liberalising the exchange rate were necessary reforms. However, he warned that poor timing and weak fiscal discipline could undermine their intended benefits.

Sanusi criticised Nigeria’s long-standing reliance on foreign refineries while domestic facilities remained underutilised, describing it as a structural failure. He noted, however, that recent developments in local refining have begun to reverse this trend, with Nigeria now exporting petroleum products—an outcome he described as positive for the economy.

Despite supporting the reforms in principle, Sanusi questioned their implementation sequence. He argued that exchange rate liberalisation in a loose monetary environment contributed to the sharp depreciation of the naira, stressing that tighter monetary controls should have preceded such measures.

He further highlighted concerns about the country’s fiscal direction, particularly the continued accumulation of debt. According to him, eliminating subsidy payments should have created room for fiscal consolidation rather than increased borrowing.

“We’ve removed the subsidy and now have more revenue. What should follow is reduced borrowing, not an increase,” he said, questioning the purpose of ongoing loans.

Recent figures indicate that Nigeria’s borrowing plan for 2026 has risen by ₦11.31 trillion, bringing the total projected borrowing to ₦29.20 trillion. In addition, President Bola Tinubu has sought Senate approval for a fresh $516 million loan to support infrastructure projects, including the Sokoto-Badagry Superhighway.

Sanusi maintained that while key reforms were inevitable, their success depends on disciplined implementation and clear fiscal priorities.