President Bola Tinubu has sought the approval of the Senate for a fresh N1.15 trillion loan from the domestic debt market to finance deficit in the 2025 budget.
Tinubu’s request was contained in a letter addressed to the President of the Senate, Godswill Akpabio, and read during plenary on Tuesday.
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According to the letter, the proposed borrowing is aimed at bridging the funding gap and ensuring the full implementation of government programs and projects under the 2025 fiscal plan.
Following the reading of the letter, Akpabio referred the request to the Senate Committee on Local and Foreign Debt for further legislative input.
The committee is expected to report back to plenary in one week.
In early October, President Tinubu wrote to the House of Representatives seeking the approval to raise $2.34bn in external capital.
The fund is aimed at financing part of the 2025 budget deficit and refinancing maturing Eurobonds.
The Speaker, Rep. Abba Tajudeen, had said that the president also sought parliamentary approval for the issuance of a $500m debut sovereign Sukuk in the international capital market.
He said that the request was made in accordance with the provisions of Sections 21(1) and 27(1) of the Debt Management Office (DMO) Establishment Act 2003.
According to the president, the total external capital to be raised amounts to $2.347bn, comprising $1.229bn in new external borrowing provided for in the 2025 Appropriation Act and 1.118 billion dollars.
He further stated that the money was to refinance maturing Eurobonds due in November.
Tinubu had said that the borrowing would be sourced through a mix of Eurobond issuance, loan syndications, bridge financing and direct borrowing from international financial institutions, depending on market conditions.
He said that the new financing was part of the government’s strategy to support infrastructure development, refinance costly debt obligations and sustain investor confidence in Nigeria’s credit market.
The president said the $500m sovereign Sukuk would diversify Nigeria’s funding sources, attract ethical investors and complement domestic Sukuk issuances that had raised over 1.39 trillion dollar since 2017 for critical road projects across the country.
“The proposed Sukuk may be issued with or without a credit enhancement guarantee from the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC) — member of the Islamic Development Bank Group
“Under the plan, up to 25 per cent of the proceeds could be used to refinance high-cost government debts, while the balance will fund pre-identified infrastructure projects,” he said.
Tinubu had assured that the refinancing of the maturing 1.118 billion dollar Eurobonds due in November was a standard practice in global debt management, aimed at avoiding default and maintaining market credibility.
He affirmed the willingness of the Federal Ministry of Finance and the Debt Management Office to collaborate with transaction advisers to ensure the most favourable market terms and conditions at the time of issuance.