MPC member: Petrol subsidy removal, FX liberalisation yet to curb debt growth

Murtala Sagagi, a member of the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN), says Nigeria’s debt profile still rising despite the removal of petrol subsidy and the liberalisation of the foreign exchange (FX) market.

In a communique — covering MPC’s meeting held from July 21 to 22 — released by the CBN on Monday, Sagagi said limited economic diversification and overreliance on debt by the government have worsened the vulnerability of the economy to shocks and fluctuations in global commodity prices.“Since mid-2023, unlocking opportunities for economic diversification and associated welfare improvement has remained the ultimate goal of the current structural reforms,” Sagagi said.“However, even with the removal of fuel subsidy and liberalization of the exchange rates, the appetite for unfettered spending by the government has grown even stronger.

“In the first quarter of 2025, the country has witnessed an increase in total public debt from N144.67 trillion as of December 31, 2024, to N149.39 trillion as of March 31, 2025.

“The country’s debt profile is deteriorating and thus shrinking the fiscal space due to huge debt service costs.”Sagagi also said the inflation moderation attained and the doggedness of the apex bank to ensure foreign exchange unification and disciplined liquidity management should be further harnessed to speed up growth and improve welfare.He added that to avoid reversal of the gains so far achieved, ensuring fiscal discipline and deliberate effort to stimulate local productivity and employment are non-negotiable.

Sagagi also projected that growth in Nigeria is expected to reach 3.2 percent in 2025 making it one of the highest in the region.

“To fast-track inclusive growth, a policy shift is required to restore fiscal space, exercise more discipline, promote domestic oil refining, and stimulate non-oil production and exports,” he added.

“This is particularly instructive with the new Finance Act and improved oil and non-oil revenues.”Sagagi said growth enhancing adjustments are needed using fiscal-monetary tools to stimulate local productivity, reduce debt and crowding out in private sector investment.

MPC member: Petrol subsidy removal, FX liberalisation yet to curb debt growth