President Bola Tinubu has written to the National Assembly seeking approval for a new external borrowing of $2.209 billion (N1.767 trillion), as provided for in the 2024 Appropriation Act, with experts warning against plunging the country into more debt.
According to the President, the request is part of Nigeria’s budgetary financing plan, which aims to address a portion of the N9.17 trillion fiscal deficit in the 2024 budget.
President Tinubu has also forwarded to the Senate the 2025–2027 Medium Term Expenditure Framework and Fiscal Strategy Paper (FSP), MTEF/ FSP 2025- 2027 approved by the Federal Executive Council, FEC, on November 10, 2024 to parliament.
The MTEF/FSP request which sought expeditious passage, was referred to the Senate Committees on Finance and that of National and Economic Planning to report back as soon as practicable.
The President’s letter, addressed to the President of the Senate, Senator Godswill Akpabio, and the Speaker, House of Representatives, Tajudeen Abbas, during plenary, said the request is in line with provisions of Sections 21(1) and 27(1) of the Debt Management Office (DMO) Establishment Act, 2003.
The borrowing plan had already been approved by FEC.
The letter also provided detailed terms and conditions for the issuance of Eurobonds in the international capital market to raise the required sum.
President Tinubu authorized the Minister of Finance and Coordinating Minister of the Economy, alongside the DMO, to take all necessary steps to execute the plan upon National Assembly approval.
President Tinubu explained that the purpose of the borrowing would be to finance the 2024 budget deficit as part of Nigeria’s broader fiscal strategy, adding that the money would be raised through Eurobonds or other external borrowing instruments.
The President appealed for swift legislative action, emphasizing the importance of timely resolution to implement the borrowing plan.
Akpabio referred the matter to the Committee on Local and Foreign Debts, chaired by Senator Aliyu Wamako (APC, Sokoto) with instructions to report back within 24 hours.
Long run effect is likely to be devastating for economy — Adonri
Reacting to the fresh external loan request by President Tinubu, David Adonri , the Executive Vice Chairman at Highcap Securities Limited, said: “FGN is already in a debt trap, thus requiring new foreign debt to service outstanding debt.
‘’FGN also requires new foreign debt to finance import content of it’s budget. FGN is now in a quagmire as sinking further in debt worsens its precarious situation. Yet, without additional foreign debt, it cannot survive.
‘‘Although, I don’t know the structure of the new debt, its long-run effect is likely to be devastating for the economy”.
How loan’ll be repaid is necessary — Prof Uwaleke
Also commenting, Prof Uche Uwaleke, President, Association of Capital Market Academics of Nigeria, ACMAN, said: “The request is part of the borrowing plan contained in the 2024 budget and so in order.
‘‘However, there is a need to specify the projects to be financed, whether or not they are self-liquidating and how the loan will be repaid. This is necessary considering the country’s already huge debt burden.
‘‘Another concern I have is that the emphasis seems to be on Eurobonds which are non-concessional and very costly. I think more attention should be on the Sovereign Sukuk which are project-tied and a lot cheaper”.
Economic impact depends on how it is utilized — Egbomeade
In his own comment, Clifford Egbomeade, Public Affairs Analyst/Communications expert, said: “President Bola Tinubu’s request for a fresh external loan of N1.77 trillion ($2.209 billion) reflects Nigeria’s ongoing struggle with fiscal deficits, with the proposed loan aimed at financing part of the N9.7 trillion shortfall in the 2024 budget.
“While external borrowing can provide immediate relief to budgetary constraints, Nigeria’s rising debt servicing costs—$3.58 billion in the first nine months of 2024, up 39.77% from 2023—underscore the increasing strain on public finances. ‘‘The devaluation of the naira has further exacerbated the real value of these obligations, making external loans costlier to repay in local currency.”
On the economic impact of the new loan, he said: “It will largely depend on how effectively it is utilized. If the funds are channeled into productive sectors like infrastructure, healthcare, or education, they could stimulate economic growth, create jobs, and improve public services. ‘‘However, Nigeria’s history of fiscal mismanagement raises concerns about transparency and accountability in loan utilization.
‘‘Without proper oversight, the loan could contribute to wasteful spending or fail to deliver the intended developmental outcomes, leaving the country burdened with even higher debt.
“ Moreover, Nigeria’s over-reliance on oil revenue and federal allocations highlights the urgent need for structural reforms to diversify revenue sources. As 32 states relied on FAAC allocations for at least 55% of their total revenue in 2023, and 14 states depended on these funds for over 70%, the country’s fiscal sustainability remains precarious.
‘‘To mitigate the risks associated with rising debt, the government must prioritize boosting internally generated revenue, restructuring existing loans, and adopting policies that ensure efficient debt utilization. Without these measures, further borrowing could deepen Nigeria’s economic challenges rather than alleviate them”.
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