The Pacesetter Frontier Magazine

Tag: Taiwo Oyedele

  • FG Disputes World Bank’s N7.7tn Interest Payments Figure

    FG Disputes World Bank’s N7.7tn Interest Payments Figure

    Precious Nwonu, Enugu

    The Federal Government has challenged the World Bank’s assessment of Nigeria’s debt burden, arguing that reports suggesting interest payments exceeded government revenue in the first half of 2026 were based on an incomplete fiscal picture.

    The Federal Ministry of Finance said the reported N7.7tn interest payments, equivalent to about 124 per cent of the N6.2tn revenue recorded during the period, did not accurately reflect the government’s debt position.

    The ministry stated its position in a statement issued on Sunday and shared on X by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.

    The response followed public discussions surrounding the World Bank’s October 2026 Nigeria Development Update, which reported Federal Government revenue of N6.2tn and interest payments of N7.7tn between January and June 2026.

    An analysis of the published figures showed that interest payments exceeded revenue by N1.5tn, representing approximately 124.2 per cent of revenue. The ratio was calculated from the figures in the report rather than expressly stated by the World Bank.

    However, the ministry argued that the calculation was misleading for three reasons, including the inclusion of debt obligations serviced on behalf of state governments, incomplete revenue figures and the timing of revenue collections.

    According to the ministry, the interest-payment figure included external loans serviced by the Federal Government on behalf of other tiers of government.

    It maintained that comparing such obligations exclusively with federal revenue inflated the ratio because debt and revenue figures should cover the same level of government.

    The ministry also argued that the revenue figure excluded income generated by government agencies and enterprises but not yet remitted to the Treasury.

    It added that statutory payment schedules meant some taxes were collected predominantly in the second half of the year, making the first six months an incomplete basis for evaluating annual debt obligations.

    To support its position, the ministry compared the figures for the first half of 2025 with those for the corresponding period in 2026.

    It said Federal Government revenue increased by 72 per cent, from N3.6tn to N6.2tn, while interest payments rose by 38 per cent, from N5.6tn to N7.7tn.

    The ministry said the interest-to-revenue ratio consequently declined from 156 per cent in the first half of 2025 to approximately 124 per cent in the first half of 2026.

    It also stated that the full-year debt-service-to-revenue ratio had fallen below 60 per cent, compared with 97 per cent before the current administration’s reforms.

    The ministry described the figures as evidence of improved fiscal management, arguing that the gap between interest payments and revenue had narrowed from N2tn to N1.5tn.

    “This is the result of reforms working, not a sign of fiscal distress,” the ministry stated.

    It further rejected the use of a six-month fiscal snapshot as a definitive measure of debt sustainability, pointing instead to the World Bank’s full-year projection.

    “The same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 per cent of revenue. This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the statement read.

    The ministry also defended the administration’s borrowing programme, insisting that all loans obtained by the government were lawful and had received the necessary approvals.

    It said borrowing complied with the limits authorised by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

    The ministry added that the government’s borrowing activities were guided by the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, while details of public debt were regularly published by the Debt Management Office.

    However, the ministry did not provide revised revenue and interest-payment figures or an alternative ratio to support its challenge to the World Bank’s assessment.

     FG to Begin Repaying $1.25bn World Bank Loan in 2031

    Meanwhile, the Federal Government is scheduled to begin repaying the principal on a $1.25bn World Bank loan in December 2031, with the final instalment on one of the facilities due in June 2060.

    The financing, obtained under the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing programme, is designed to support reforms targeting access to credit, electricity supply, trade competitiveness and government revenue.

    The facility comprises a $750m concessional credit from the International Development Association and a $500m loan from the International Bank for Reconstruction and Development, both members of the World Bank Group.

    The loan was approved in 2026 amid concerns about Nigeria’s rising debt burden and calls for the government to limit external borrowing.

    The World Bank said the financing would support Nigeria’s transition towards more inclusive economic growth, improve competitiveness and create jobs.

    The reforms cover capital markets, digital services, electricity access, trade barriers, agricultural inputs and domestic revenue mobilisation.

    According to the financing agreements reviewed by *The PUNCH*, principal repayments on both facilities will begin on December 15, 2031, although their repayment periods differ.

    The $750m IDA credit is scheduled to be fully repaid by June 15, 2051, while the $500m IBRD loan will run until June 15, 2060.

    Under the IDA agreement, Nigeria will repay 2.5 per cent of the credit every six months, amounting to $18.75m per instalment, or $37.5m annually during full repayment years.

    For the IBRD facility, the government will make semi-annual principal payments of 1.72 per cent from December 2031 through December 2059, followed by a final instalment of 1.96 per cent in June 2060.

    The regular IBRD instalments amount to approximately $8.6m every six months, while the final payment is about $9.8m.

    Combined, the two facilities will require principal repayments of approximately $27.35m every six months between December 2031 and June 2051, equivalent to about $54.7m annually during full repayment years.

    The repayment schedules will extend across several administrations, with the final principal payment on the IBRD facility due nearly 34 years after the agreements were signed.

    The figures cover principal repayments only and exclude interest and other applicable charges.

    Under the IBRD agreement, the interest rate is based on a reference rate plus a variable spread. The IDA credit’s interest charge is calculated using the reference rate and variable spread, less 250 basis points, subject to applicable conditions.

    The IBRD loan also carries a front-end fee of 0.25 per cent, equivalent to $1.25m, and an annual commitment charge of 0.25 per cent on the undisbursed balance.

    The IDA agreement provides for a maximum annual commitment charge of 0.5 per cent on the undisbursed financing balance.

    The agreements do not specify a fixed dollar amount for total interest payments over the repayment period, meaning the eventual borrowing cost will depend on applicable rates and other contractual provisions.

    The IDA credit is structured for disbursement in a single tranche, subject to the World Bank’s assessment of Nigeria’s economic policies and implementation of agreed reforms.

    The IBRD facility is divided into two withdrawal tranches of $249.375m each, with the remaining $1.25m allocated to the front-end fee.

    Release of the second tranche depends on satisfactory progress in implementing the programme, maintaining an adequate macroeconomic framework and completing agreed policy actions.

    The IBRD agreement also allows the lender to cancel part or all of the undisbursed balance if the government fails to take satisfactory corrective measures within 90 days of receiving notice.

    Both agreements have a closing date of December 31, 2027.

    Loan Tied to Tax, Electricity and Trade Reforms

    The financing agreements outline two broad reform areas: improving access to credit, digital services and electricity, and strengthening economic competitiveness through trade, taxation and agricultural measures.

    Among the recognised measures are the Investment and Securities Act 2025, the National Integrated Electricity Policy, electricity metering reforms and regulations designed to encourage private investment in interconnected mini-grids.

    The government also committed to implementing trade reforms under the African Continental Free Trade Area, including the gradual liberalisation of 90 per cent of tariffs on goods from African countries over 10 years.

    Other measures include removing import bans on specified essential food products and inputs, reducing import adjustment taxes on selected commodities by at least 25 per cent in 2026, and progressively eliminating applicable adjustment taxes between 2027 and 2036.

    In taxation, the agreements recognise the introduction of mandatory electronic invoicing for Value Added Tax, a 15 per cent minimum effective tax rate for large companies and multinational enterprises, and an increase in the maximum personal income tax rate from 24 to 25 per cent.

    The financing arrangements also impose reporting and accountability requirements on Nigeria.

    The government is required to maintain dedicated dollar accounts for receiving loan proceeds and ensure that equivalent amounts are reflected in its budget management system.

    The Federal Ministry of Finance must report amounts received, relevant account details and transaction records to the World Bank within 30 days of each withdrawal.

    The agreements further require the accounts to be audited by auditors of the Central Bank of Nigeria acceptable to the World Bank. Certified audit reports must be submitted within four months of withdrawal and made publicly available.

    The World Bank’s financing is intended to support Nigeria’s economic reform programme, with disbursement subject to satisfactory implementation of the agreed measures and maintenance of an adequate macroeconomic policy framework.

  • FG Warns Fuel Subsidy Return Could Trigger Capital Flight

    FG Warns Fuel Subsidy Return Could Trigger Capital Flight

    Precious Nwonu, Enugu

    The Federal Government has warned that restoring petrol subsidies could trigger capital flight, weaken the naira and reverse gains made through its economic reforms.

    The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the warning during a briefing in Bangkok, Thailand, following the 2026 IMF-World Bank Annual Meetings.

    Oyedele said investors had repeatedly sought assurances that the government would not reverse the removal of fuel subsidies or the unification of exchange rates, particularly as Nigeria approaches another election cycle.

    He warned that any indication of a return to subsidies could undermine investor confidence, prompt capital withdrawals and increase pressure on the foreign exchange market.

    The briefing was also attended by the Central Bank of Nigeria Governor, Olayemi Cardoso, and the Minister of Budget and Economic Planning, Atiku Bagudu.

    The delegation clarified that the Federal Government’s 30-day petrol price reduction did not amount to a reinstatement of fuel subsidies.

    Bagudu stressed the need for closer coordination between fiscal and monetary authorities to sustain the gains of ongoing reforms. The government also announced a seven per cent economic growth target.

    At the meetings, Nigeria called for reforms of the International Monetary Fund and World Bank to strengthen the representation of developing economies in global financial decisions and improve their access to funding.

    Presenting the Group of 24 communiqué, Oyedele said geopolitical conflicts, trade uncertainties, volatile commodity prices and climate-related shocks were threatening global growth, with emerging and developing economies bearing a disproportionate share of the impact.

  • Oyedele Warns Against Taxing Poor Nigerians, Urges AfCFTA Policy Alignment

    Oyedele Warns Against Taxing Poor Nigerians, Urges AfCFTA Policy Alignment

    Precious Nwonu, Enugu

    The Minister of Finance, Taiwo Oyedele, has warned African governments against imposing additional taxes on vulnerable citizens and productive businesses to address fiscal challenges, saying such measures could worsen hardship and undermine economic growth.

    Oyedele also called for stronger policy coordination among African countries to remove trade barriers and maximise the benefits of the African Continental Free Trade Area.

    He made the remarks during discussions at the Annual Meetings, where he addressed taxation, economic reforms, employment, development financing and regional trade integration.

    The minister said governments should focus on improving domestic revenue mobilisation and eliminating inefficient expenditure rather than introducing tax measures that place additional pressure on low-income households and businesses.

    According to him, excessive taxation could leave vulnerable families with fewer resources for essential needs, including food, healthcare and education, while placing pressure on businesses that generate jobs and economic activity.

    He noted that both taxation and borrowing had consequences, adding that governments needed to strike a balance that ensured sustainable public finances without compromising citizens’ welfare.

    “The essence of tax and of debts is to cater for the people. If you put people always at the centre of your policies, you will not be perfect, but you are likely to strike a balance that works and is sustainable,” he said.

    Oyedele also stressed that economic growth should be measured by its ability to create jobs, promote inclusion and improve living standards rather than by macroeconomic indicators alone.

    He warned that the growing adoption of artificial intelligence could affect employment opportunities if governments failed to develop appropriate policies to manage its impact.

    The minister said economic stability remained essential for sustainable growth, investment and prosperity, noting that governments needed a stable foundation to implement structural reforms and infrastructure programmes.

    On regional integration, Oyedele said the AfCFTA offered African countries an opportunity to combine their fragmented national markets into a larger continental market capable of attracting investment, expanding production and boosting trade.

    He, however, warned that the agreement would achieve limited results unless governments addressed barriers to cross-border commerce, particularly non-tariff restrictions.

    “The AfCFTA is trying to turn 54 countries into one market, so that way it’s easy for us to scale. But that will not happen until we remove the barriers, and many of them are actually non-tariff,” he said.

    Oyedele explained that effective implementation required consistent regulations, clear standards, supporting infrastructure and coordinated economic policies across the continent.

    He cited Nigeria’s National Single Window initiative as an effort to simplify border procedures and improve trade facilitation through technology.

    The minister also disclosed that Nigeria was developing an economic policy framework that incorporates its international commitments, including regional agreements.

    He said differences in trade, fiscal and monetary policies among African countries could make regional integration difficult, stressing the need for governments to align their approaches.

    Oyedele further identified policy consistency, strong institutions and public trust as essential conditions for attracting private investment to Africa.

    “Capital follows trust before it follows returns. They need to be able to plan and predict what you are going to do,” he said.

    Reflecting on Nigeria’s economic reforms, he said governments must clearly explain policy changes, communicate the consequences of inaction and implement reforms in the right sequence.

    He argued that reforms should be supported by legislation and strong institutions to ensure continuity beyond changes in political leadership.

    Oyedele also emphasised the need to protect vulnerable citizens from the immediate effects of economic adjustments while waiting for the benefits to materialise.

    He cited cash transfers reaching more than 10 million households and education funding supporting over 1.5 million students as examples of measures introduced to cushion the effects of reforms in Nigeria.

    The minister maintained that sustainable economic progress depended on combining macroeconomic stability with inclusive growth, reliable institutions, social protection and stronger regional cooperation.

  • FG Insists NNPC Petrol Discount Will Not Use Public Funds

    FG Insists NNPC Petrol Discount Will Not Use Public Funds

    Precious Nwonu, Enugu

    The Federal Government has maintained that the petrol discount introduced by the Nigerian National Petroleum Company Limited (NNPC) will not be financed with public funds, describing the initiative as a temporary reduction in the company’s retail profit margin rather than a return to fuel subsidy.

    The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, explained the government’s position in a statement issued by the Federal Ministry of Finance in Abuja on Friday, titled, “The NNPC Retail Discount Is Not a Subsidy: No Public Money Is Involved.”

    The clarification followed an announcement by the Presidency that NNPC Retail Limited would temporarily forgo its profit margin on petrol and sell the product at cost to cushion households against fluctuations in global oil prices.

    The Presidency, in a statement signed by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, said the initiative had the backing of President Bola Tinubu and was not a reinstatement of the subsidy removed in 2023.

    Oyedele said the discount and fuel subsidy were fundamentally different, explaining that the former involved a retailer reducing its earnings to offer customers lower prices, while the latter required the government to pay part of the cost using public revenue.

    “Some commentators have described the discount as a return of fuel subsidy. That is not correct,” the minister said.

    He stressed that the financial burden of the discount rested solely on NNPC Retail, adding that neither the federal budget nor the Federation Account would be used to fund the price reduction.

    According to him, NNPC Retail purchases petrol from the Dangote Refinery and other suppliers at prevailing market prices and on commercial terms before applying its retail margin. Under the new arrangement, the company reduces or temporarily removes that margin to lower pump prices.

    The minister warned that selling crude oil below market prices could amount to a subsidy if the resulting revenue shortfall were covered with public funds.

    He explained that NNPC Retail, a wholly owned subsidiary of NNPC Limited, had operated for more than two decades as a petroleum marketing and retail company, with responsibilities that include improving the availability and affordability of refined petroleum products nationwide.

    Oyedele argued that the temporary reduction in profit per litre would not necessarily translate into lower overall earnings for the company, as increased sales volumes and stronger customer loyalty could compensate for the reduced margin.

    He said the arrangement could ultimately benefit both consumers and the government through higher sales and potentially increased dividends paid to the Federation.

    The minister also dismissed concerns that the discount could encourage petrol smuggling into neighbouring countries, noting that retail margins accounted for less than five per cent of the pump price.

    He said the discount would not significantly widen the price difference between Nigeria and neighbouring countries, where petrol prices were reportedly 20 to 40 per cent higher.

    According to Oyedele, the limited reduction in retail margins would therefore not create a new incentive for cross-border smuggling comparable to the distortions associated with previous subsidy arrangements.

    He listed other government interventions intended to reduce the impact of fuel costs, including expanding compressed natural gas adoption for transportation, waiving taxes and duties on petrol, and removing illegal charges that contribute to higher transportation costs.

    Oyedele said the measures were designed to provide economic relief without returning the country to a subsidy system the government considers financially unsustainable.

  • FG Reduces Interest Rate On Late Tax Payments From October

    FG Reduces Interest Rate On Late Tax Payments From October

    Precious Nwonu, Enugu

    The Federal Government has introduced a new tax administration order that will reduce the interest charged on late payment of taxes from October 1, 2026.

    The Nigeria Tax Administration Order 2026 was signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, according to a statement by the Federal Ministry of Finance.

    The order was issued pursuant to Section 65 of the Nigeria Tax Administration Act, 2025, which provides for interest on tax liabilities that remain unpaid after the due date.

    Under the new framework, the interest rate for taxes payable in naira will be linked to the Central Bank of Nigeria’s Monetary Policy Rate, with an additional one percentage point.

    Oyedele explained that the new rate represents a reduction from the previous five-percentage-point spread.

    However, the applicable interest rate will not fall below the yield on 364-day Nigerian Treasury Bills, reflecting the government’s cost of borrowing when tax payments are delayed.

    For tax liabilities denominated in foreign currencies, the order sets the interest rate at the Secured Overnight Financing Rate, a benchmark for US dollar borrowing, plus six percentage points.

    The order further provides that if SOFR is discontinued, its officially recognised successor rate will be used.

    The Nigeria Revenue Service has been directed to publish the applicable interest rates on its website by the third business day of every month.

    The minister said the new system would give taxpayers greater certainty about the financial consequences of delaying tax payments while ensuring that late payment does not become a cheaper source of financing than borrowing from the market.

    Oyedele said the reform was also designed to promote fairness and predictability in tax administration by ensuring that taxpayers know the applicable rates in advance.

    The new rates will apply to interest accruing from October 1, 2026, including interest on tax liabilities that became due before that date.

    However, interest that accrued before October 1 will remain subject to the rules applicable at the time, where specifically provided for under the previous regime.

    The 2026 order replaces the 2017 notice on interest charged on unpaid taxes, as well as other earlier notices dealing with the same subject.

    The reform does not alter the 10 per cent penalty for late payment prescribed under Section 65 of the Nigeria Tax Administration Act.

    Tax authorities will also retain the power under Section 66 of the Act to waive penalties or interest where sufficient grounds are established.

    Oyedele urged taxpayers to file their returns and settle their tax obligations on time, while advising those with outstanding liabilities to make payments promptly or engage the relevant tax authority to address their obligations.

    The minister also encouraged taxpayers to regularly check the Nigeria Revenue Service website for the monthly applicable interest rates.