Economists have dismissed concerns over the federal government’s plan to secure a new $1.25 billion loan, saying such borrowing remains necessary to finance critical infrastructure and support economic development.

The economists spoke in separate interviews on Monday in Lagos.

Tunde Adeoye of the Department of Economics, University of Lagos, said there should be no apprehension over new loans if the funds were channelled toward developmental projects capable of improving living standards.

According to him, borrowing becomes inevitable for emerging economies facing revenue constraints and huge infrastructure deficits.

“People should not be worried about new loans if the funds are properly utilised for developmental projects.

“What should concern Nigerians more is the impact of those projects on the living standards of the people,” Mr Adeoye said.

He noted that the 2026 budget of about N68 trillion was projected against an estimated revenue of N34 trillion, leaving a significant deficit gap.

According to him, the government must explore borrowing options, especially to finance capital projects and critical infrastructure.

“Our 2026 budget is heavily deficit-funded, and loans remain one of the viable options for financing the capital component needed to drive infrastructure development,” he said.

Mr Adeoye stressed that infrastructure investment remained critical to economic growth, job creation and improved productivity.

Also, former executive secretary of the Chartered Institute of Bankers of Nigeria (CIBN), Uju Ogubunka, said the proposed loan is appropriate, provided the funds are invested in productive sectors of the economy.

“The government’s plan to secure a new loan is not out of place, especially if the funds are channelled into productive sectors that can stimulate economic growth, create jobs and reduce poverty,” Mr Ogubunka said.

He, however, advised the government to adopt more innovative financing models, particularly public-private partnerships (PPP), to reduce pressure on public debt.

According to him, many emerging economies are leveraging PPP arrangements to bridge infrastructure gaps and accelerate development.

“The government should encourage stronger private sector participation in infrastructure financing through PPP arrangements.

“That is the model many emerging economies are using successfully to address their infrastructure needs,” he said.

The federal government has intensified engagement with the World Bank over a proposed $1.25 billion loan facility aimed at supporting economic reforms, job creation and competitiveness.

The proposed facility, titled “Nigeria Actions for Investment and Jobs Acceleration”, is expected to be presented for approval on June 26.

If approved, the loan will become the second-largest World Bank facility secured under President Bola Tinubu’s administration, after the $1.5 billion Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing approved in June 2024. 

(NAN)