President Bola Tinubu has requested the National Assembly’s approval to secure external loans of $21.5 million and ¥15 billion, along with a grant of €65 million, as part of the federal government’s proposed 2025–2026 external borrowing plan.
The president’s request was contained in a letter read by the Senate President, Godswill Akpabio, during the plenary on Tuesday.
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The letter also included a summary of the funding breakdown, but the content was not made public.
“The distinguished Senate is invited to note that the 2025-2026 borrowing plan cuts across all sectors with specific emphasis on infrastructure, agriculture, health, education, water supply, growth, security and employment generation, as well as financial management reforms, amongst others.
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“The total facility of the projects and programs under the borrowing plan is estimated at US$21.5 million and ¥15 billion and grants of €65 million respectively. The summary of the breakdown is attached herewith,” the letter reads.
Mr Tinubu explained that the funds will be used to generate employment, promote skill acquisition, enhance entrepreneurship, reduce poverty, and improve food security across the country.
“The majority of these projects and programmes will be implemented across all the 36 states of the federation and the federal government territory,” he added.
Nigeria’s public debt has increased in recent years, raising concerns about the country’s fiscal sustainability.
According to Nigeria’s Debt Management Office (DMO), as of 31 December 2024, Nigeria’s total public debt stood at N144.7 trillion (approximately $94.2 billion). About 51.4 per cent of the total (N74.4 trillion) is domestic debt while 48.6 per cent (N70.3 trillion) is external debt.
The rising debt has resulted in increased debt servicing costs. In 2023, Nigeria spent N7.8 trillion on debt servicing, a 121 per cent increase compared to N3.52 trillion in the previous year. The amount spent on debt servicing rose to N13.12 trillion in 2024, a 68 per cent increase from the 2023 figure. These high debt servicing costs mean less funds for important sectors such as infrastructure and social services, potentially hindering economic growth and development.
Despite these fiscal pressures, the Tinubu administration maintains that borrowing remains an essential instrument for development financing, especially as domestic funding sources continue to dwindle. However, borrowing is not limited to this administration; successive governments in Nigeria borrowed to finance projects, even while struggling to settle the existing debts.
Mr Tinubu, in a media chat last December, defended his borrowing strategy, saying that he took the decision not to inflict pain on Nigerians, but because of his commitment to infrastructural development.
The president said borrowing is not a crime and Nigeria needs such funds for infrastructural development.
Declining domestic funding
In the letter, Mr Tinubu reiterated that borrowing was necessary due to declining domestic revenues and the urgency of reviving Nigeria’s ageing and overstretched infrastructure.
He added that the funds would be channelled primarily into critical infrastructure projects in power, transportation, healthcare, and other key areas.
“In light of the significant infrastructure deficit in the country and the vast financial resources needed to address this gap amid declining domestic funding, it has become essential to pursue prudent external borrowing to close the financial shuffle. These funds will primarily be directed towards critical infrastructure projects, including sectors of power, railways, healthcare, amongst others.
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“Given the urgent nature of these needs and the importance of stabilising the economy, it is crucial to seek the consent and approval of the distinguished Senate for the 2025-2026 external borrowing plan,” Mr Tinubu said.
The president assured that the loans would be used responsibly to fulfill government obligations and improve the livelihoods of Nigerians through effective and timely project implementation.
“This plan will enable the government to fulfil its obligations to the Nigerian people through timely disbursements and effective project implementation,” he said.
After reading the letter, Mr Akpabio referred the request to the Senate Committee on Local and Foreign Debt.
He directed the committee to review the proposal and present its findings to the Senate within two weeks for consideration.
