President Bola Tinubu has asked the Senate to approve a fresh $2.3 billion external loan incorporated into the 2025 budget.
The request was contained in a letter read by the Senate President, Godswill Akpabio, during plenary on Wednesday.
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In the letter, Mr Tinubu explained that the facility would form part of the funds to finance the N54.99 trillion 2025 Appropriation Bill.
He said the borrowing request was made in line with Sections 21(1) and 27(1) of the Debt Management Office Act and had received the approval of the Federal Executive Council (FEC).
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The president stated that the loan would be raised through the issuance of Eurobonds, bridge finance facilities from bookrunners, loan syndication, or direct borrowing from international financial institutions.
“To raise external capital in the sum of USD2,347,465,000.00 comprised of New External Borrowing in the 2025 Appropriation Act (USD1,229,113,000.00) and refinancing of maturing Eurobonds (USD1,118,352,000.00), through any of the following option(s): Issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication and Direct Borrowing from International Financial Institutions,” the letter reads.
A similar request was also transmitted to the House of Representatives, where the Speaker, Abbas Tajudeen, read it during plenary on Tuesday.
After reading the correspondence, Mr Akpabio referred the proposal to the Senate Committee on Local and Foreign Debt for further review and directed the committee to report back within one week.
This new borrowing plan comes barely four months after President Tinubu sought approval to obtain $21.5 million and ¥15 billion in loans, along with a €65 million grant, as part of the federal government’s proposed 2025–2026 external borrowing plan.
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.
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In 2024, there was 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.
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, claiming 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 that many decayed infrastructures need funding.
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