Debt Servicing To Rise As NASS Approves Fresh N1.15tn Borrowing

…Nothing Wrong With Borrowing, Oshiomhole Defends Rising Debt Profile

The National Assembly is set to consider another N1.15tn domestic loan request from President Bola Tinubu in the days ahead.

The loan request was received in a presidential communication read by Senate President Godswill Akpabio at plenary on Tuesday.

According to the President, the loan is meant to cover part of the deficit in the 2025 federal budget

Tinubu stated that the loan would be used to bridge fiscal shortfall and to ensure a smooth implementation of key programmes and projects in the 2025 budget.

“This request is under the provisions of Section 44 (1) and (2) of the Fiscal Responsibility Act 2007 and Section 1(7) of the Executive Order, which requires National Assembly approval for all new borrowings and appropriation of the proceeds,” the President stated in the letter.

The request has been referred to the Senate Committee on Local and Foreign Debt, which is expected to submit a report within a week.

Recall that the National Assembly had, only last week, approved the President request for $2.847bn external borrowing.

This included a $500m Sovereign Sukuk, to finance the 2025 budget deficit to fund the country’s maturing Eurobonds.

The loan, which is coming from the international capital market,
received legislative approval in the two chambers.

The President’s request for the external loans, was first transmitted to the National Assembly on October 8.

Senator Aliyu Wamakko, who presented a committee report that led to the approval, said the borrowing was vital for Nigeria’s economic stability amd project continuity.

Wamakko stressed the need for the country to maintain its credit reputation in the international financial system
with the borrowing.

According to him, the approval would enable the federal government meet its 2025 funding needs without disrupting its other fiscal commitments.

The chairman of the Senate Committee on Finance, Sani Musa, had argued that the loans were critical for the effective implementation of the 2025 Appropriation Bill.

He added that the borrowing was already captured in the fiscal projections.

“It is very necessary that we give approval to this request so that the 2025 appropriation will be given the necessary funding,” Senator Musa said.

On his part, Senator Tokunbo Abiru, who is the Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, also said the borrowing would not add to the country’s debt burden.

“This is more of a compliance issue because the 2025 Appropriation Act has already captured it as part of the deficit financing.

“The second request is a refinancing arrangement to ensure that the country does not default in Eurobond servicing,” Abiru had added.

Senator Adams Oshiomhole (Edo North), similarly defended the borrowing, arguing that loans, when targeted at productive sectors, could drive economic recovery and generate employment.

“There is nothing wrong with borrowing if it is properly structured and used to address critical issues like unemployment and infrastructural decay,” Oshiomhole said.

The National Assembly’s approval came in the backdrop of heated debate over Nigeria’s rising debt profile.

According to the Debt Management Office (DMO) records, Nigeria’s debt currently stood at over N97tn.