Sanusi questions new borrowing as subsidy savings fail to curb debt

The Emir of Kano, Muhammadu Sanusi II, has renewed concerns over Nigeria’s fiscal direction, questioning why the federal government continues to borrow despite savings from the removal of the petrol subsidy.

Speaking on News Central TV, the former governor of the Central Bank of Nigeria warned that weak fiscal discipline could erode the expected gains of recent economic reforms.

Sanusi, a long-time critic of the subsidy regime, maintained that its removal was inevitable, describing past dependence on foreign refineries as unsustainable for an oil-producing country. He noted, however, that recent developments in domestic refining signal a positive shift.

According to him, Nigeria is gradually reducing reliance on imported petroleum products and has begun exporting refined products, a development he described as beneficial to the economy.

Despite supporting the policy direction, Sanusi raised concerns about the sequencing of reforms, particularly the simultaneous removal of the fuel subsidy and liberalisation of the foreign exchange market. He argued that implementing both policies under loose monetary conditions contributed to the rapid depreciation of the naira.

He stressed that while subsidy removal and exchange rate reforms were necessary, their timing and supporting measures were critical to achieving stability.

Sanusi also questioned the government’s continued resort to borrowing, insisting that subsidy savings should translate into reduced debt levels and visible fiscal consolidation.

His remarks come amid debate over a fresh $516.3 million loan request by President Bola Ahmed Tinubu for sections of the proposed Sokoto–Badagry Superhighway. In a letter to Senate President Godswill Akpabio, the President said the project would span about 1,000 kilometres, linking the north-west and south-west regions.

The borrowing plan has sparked criticism from several quarters, including former Vice-President Atiku Abubakar, who, while backing the project’s objectives, urged the government to consider alternative funding options rather than increasing the country’s debt burden.