Tinubu Seeks Another $2.3bn External Borrowing To Finance 2025 Budget

President Bola Tinubu is once again, seeking the approval of the National Assembly for a fresh external borrowing of $2.3bn.

The request is being made just as the government is planning additional issue of a $500m Sovereign Sukuk, which will signal Nigeria’s debut in the international Islamic finance market.

The President’s request was conveyed through a letter read on the floor of the House of Representatives on Tuesday by Speaker, Tajudeen Abbas.

According to the President, the request complied with Sections 21(1) and 27(1) of the Debt Management Office Establishment Act, 2003.

Tinubu hinged the fresh loan application on the need to finance the 2025 Appropriation Act, which implementation has yet to begin, ten months into the year.

The President further stated that the 2025 fiscal framework anticipates $9.27bn in new borrowings to address the budget deficit, adding that $1.84bn of the sum is earmarked for external sources at an assumed exchange rate of N1,500 to the Dollar.

The external borrowing, he explained, would be sourced through various instruments,  including Eurobonds, syndicated loans, bridge financing, or direct loans from multilateral institutions, “in order to optimise cost and manage risk effectively.”

The letter further stated that a key element of the plan is the refinancing of Nigeria’s $1.118bn Eurobond, issued in 2018 at a coupon rate of 7.625 per cent and will be due in November 2025.

“This is a standard practice in debt capital markets. Refinancing through Eurobonds or syndicated loans will guarantee debt sustainability and boost investor confidence,” Tinubu added.

The President argued that refinancing maturing obligations was part of routine debt management and vital for maintaining Nigeria’s fiscal credibility.

The presidential communication also revealed a plan to issue a $500m sovereign Sukuk internationally, a move it said, aimed at deepening Nigeria’s presence in the Islamic finance market.

The Nigerian government has been financing critical infrastructure projects with Sukuk since 2017.

The government has always argued that the international Sukuk would help narrow Nigeria’s infrastructure funding gap while diversifying its investor base.

The administration is also exploring a credit enhancement guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit.

The Islamic Corporation is a member of the Islamic Development Bank Group.

The President assured the legislature that the Federal Ministry of Finance and the Debt Management Office would engage reputable transaction advisers to secure the best pricing and terms amid volatile global market conditions.