The House of Representatives has approved President Bola Ahmed Tinubu’s request to raise $2.35 billion in external borrowing to help finance the 2025 federal budget deficit.
The approval includes arrangements for refinancing maturing debt and issuing Nigeria’s debut sovereign Sukuk.
The borrowing plan, equivalent to about ₦1.84 trillion, aims to partially cover the budget deficit, estimated at ₦9.27 trillion for the year.
The House also authorised the issuance of a $500 million Sukuk to diversify Nigeria’s access to international capital markets.
Components of the Loan Request
The approved funds are structured into two main components:
1. New external borrowing of approximately $1.23 billion for the budget gap.
2. Refinancing of maturing Eurobonds valued at about $1.12 billion, to mitigate rollover risk and manage the country’s external debt profile.
The approval followed recommendations from the House Committee on Aids, Loans, and Debt Management, which reviewed the President’s formal request submitted under the Debt Management Office (Establishment) Act, 2003.
Significance and Considerations
Officials highlighted the strategic importance of the borrowing:
* Bridging the budget deficit: Provides temporary fiscal relief amid constrained domestic revenue.
* Debt management: Refinancing maturing Eurobonds reduces immediate repayment pressures.
* Market diversification: The debut Sukuk introduces Islamic-compliant financing, broadening Nigeria’s investor base.
Experts, however, caution that currency fluctuations and rising external debt obligations could impact repayment, stressing the need for disciplined deployment of the funds.
Next Steps
The government is expected to finalise the terms of the borrowing, select instruments and markets for issuance, and integrate the funds into the 2025 budget implementation plan.
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Monitoring and transparency will be key to ensuring the borrowed resources contribute to economic growth rather than recurrent expenditure.
With legislative approval secured, the Tinubu administration is set to tap international markets for billions of dollars to partially finance Nigeria’s 2025 budget deficit, while introducing new financing tools to the country’s debt portfolio.
