From 90% Debt Service to Fiscal Breathing Room: Tinubu’s Reforms Show Results

“Nigeria was using 90% of revenue to service debt in 2023. Today the budget is tripled and debt to revenue ratio is down. That’s not Leprosy. “That’s recovery.

When President Bola Ahmed Tinubu said “borrowing is not leprosy”, he was not telling Nigerians to celebrate debt. He was asking them to consider context. For the past two years, the headlines have been about one number: ₦65.9 trillion borrowed. Anger is the one emotion social media has zeroed in on. What’s missing is the math from 2023 to 2026 – and the math tells a different story.

Loud Backlash. The Balance Sheet Says More

The backlash has been fierce, as you would expect. Daily Times Nigeria quoted Tinubu in a headline defending borrowing “if used productively and responsibly”. Critics hit back with charts showing Nigeria’s debt in 2 years outpacing the last 55 years. Nigerians flooded the World Bank’s Instagram page with comments like “Stop giving Tinubu more loans,” forcing the bank to lock comments on the page.

And Nigerians are right to be tired Debt is now a national trauma. But trauma is a poor economist. To know if we are sicker or healing we have to begin a comparative analysis, define what we’re talking about, and set the context.

The Company Nigeria What Tinubu inherited

“You don’t measure a new CEO by the size of the loan. You judge him by the company he kept.”
The Tinubu administration inherited a ₦11 trillion budget deficit in 2023. The plan was to spend N11 trillion more than it expected to earn. At the time, Nigeria’s debt-to-revenue ratio was roughly 65%. It got worse after real term estimates for Q1. At one point we were literally using 90% of all government revenue just to pay interest on debt.

It is getting dark. The last administration had taken money for future crude supplies in advance so we could pay for consumption. Imagine taking over a company with current and future earnings that can’t possibly support proposed spending, yet you still have to spend to keep the lights on.

“If you’re not growing your revenue base, you’re going to have to borrow more money to survive.” Both were chosen by the Tinubu administration.

Three Reforms That Changed Math

Three structural decisions altered Nigeria’s fiscal base between 2023 and the present:

Subsidy cancellation
Economically unavoidable. Politically toxic. The fuel subsidy was debt in another guise, we borrowed to consume, not to build.
FX Unification
The massive devaluation of Naira was caused by the merging of the parallel market and CBN rate. It also killed the arbitrage racket which used to siphon billions of dollars from the treasury every year.
Reduced Cost of Credit
Interest rates on foreign loans have moved from double digit to single digit in Nigeria. That’s like refinancing a mortgage from 18 to 8 percent. You still owe. But the bleeding begins to slow.
The outcome: Nigeria’s 2026 budget is nearly three times the size of its 2023 budget, with projected revenue soaring exponentially.

The Problem: We Still Have a Gap

“Once the budget was approved, the deficit was accepted. “Pretending that borrowing is a surprise is ignoring simple arithmetic.”
And just like the CEO, whenever there is a deficit the government has two choices: raise revenues via taxation or by increasing business output; or borrow. I’m a fan of cutting spending myself. But you can’t run a country while cut your way out of a ₦11 trillion hole.

So the decision to borrow was not taken yesterday. It was done the moment the budget passed and the deficit was accepted.

Three Indicators of Fiscal Space

Why is Tinubu so confident? The “leprosy” comment is based on three quantifiable changes since 2023:

Debt to Revenue Ratio Is Down
The debt-to-revenue ratio has actually gone down, the fact that the budget has tripled. We are spending less of every naira we earn on debt service than we did at the peak of the crisis. In 2023, debt service took up 90% of revenue. There is room to fund capital projects now.
Investor Panic Is Subsiding
When buying Nigeria’s bonds, investors are less worried about our debt exposure. Eurobond yields have fallen. Market-wise, it’s a vote of confidence. Risk flows with money. When yields fall, it means the world thinks you’re less likely to default.
Dollar Debt Has In Fact Reduced
Nigeria has not defaulted on its sovereign debt. In fact, total debt in USD has actually come down from $108 billion in 2023 to $90-$95 billion now. The sharp rise in debt as measured in naira terms partly reflects devaluation, which raised the naira value of existing external debt even without new borrowing.
So, Does Nigeria Have a Debt Problem?

“So not leprosy, but not full either.”
Yes. And no. Nigeria is no longer working in the same fiscal environment that it was at the peak of its revenue crisis. In nominal terms, the revenue is better and the government has more fiscal space than when debt obligations consumed almost everything coming in.

But the country remains heavily dependent on borrowing. Inflation is still high. The naira is still weak. How long the debt remains sustainable will in the end hinge on whether revenues can continue to grow faster than obligations.

If revenues hold steady or borrowed money is wasted, Nigeria could easily revert to the same fiscal stress that characterized the years before 2023. But as long as they grow and as long as this administration does well with revenue, we will be fine.

The Tinubu Doctrine: Borrow to Transition, Not Consume

This is the heart of the administration’s PR case. Under Buhari, subsidies and FX distortions were debt financed. We borrowed to spend. Under Tinubu, debt is driving a move away from that model.

The strategy is built on three pillars:

Cheaper Money: The switch to single-digit foreign loan rates reduces the life cost of debt. That matters more than the headline borrowing number.
Revenue First: Removing subsidies, unifying FX and tax reforms are to broaden the base so that today’s loans do not become tomorrow’s crisis.
Transparency: The deficit was declared by the budget. Nigerians may dislike the borrowing. But they cannot deny it was concealed.
What Nigerians Need to Watch Next

“The real PR victory is not taking Twitter. That’s when debt service is no longer 90% of the story, and growth writes the next chapter.”
If this strategy is successful, three indicators will confirm it in 24 months:

Debt Service-to-Revenue Below 40%: Permanent exit from the 90% trap means cash for schools, roads and power.
FX Stability: The first step was to unify. Step two: Reserves and inflows. A stable naira is the best sign that reforms are working.
Debt-Funded Assets: Borrowing needs to be visible in rail, power, digital infrastructure and agriculture — projects that pay for themselves.
We’re not there yet. Inflation is biting. The naira is fragile. But the vital signs are good: less dollar debt, cheaper credit, and a budget that tripled without a debt spiral.

Conclusion: ICU to Recovery

Nigeria was on fiscal ICU in 2023. Debt service accounted for 90% of revenues. Sold forward crude. Subsidies were a bleeding sore. The Tinubu administration chose painful surgery: end subsidies, unify FX, borrow cheaper to fund transition.

The patient is breathing, but the patient is not dancing. The debt-to-revenue ratio has decreased. The dollar is less bound. Investors are less skittish.

Nigeria is not complete. But it is not leprous A country that can scale up its budget by three times, reduce its USD debt and borrow at single-digit rates has options.

The next 18 months will tell whether this breathing room translates into a full recovery. For the moment, the data confirms what the President said: borrowing is not a disease. When the underlying disease was 90% debt service, the real cure was fiscal space. And that space is finally opening up.