President Bola Tinubu has requested the National Assembly’s approval for a new N1.767 trillion external borrowing plan to support the 2024 Budget.
In a letter addressed to Senate President Godswill Akpabio and Speaker of the House of Representatives Tajudeen Abbas, the president outlined his request.
The presiding officers presented the letter during a plenary session on Tuesday.
If approved, Tinubu stated that the loan would help finance a portion of the N9.7 trillion deficit in the 2024 budget.
He noted that his request, which received backing from the Federal Executive Council (FEC), complies with Sections 21(1) and 27(1) of the Debt Management Office Act.
Additionally, Tinubu has submitted the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for 2025-2027 to the National Assembly, as well as the National Social Investment Programme Establishment Amendment Bill aimed at making the social register the primary tool for the implementation of federal social welfare programs.
Last week, the Federal Government had already approved a $2.2 billion external borrowing plan.
In his letter, the president outlined three potential financing options to secure the required funds: Eurobonds, Sovereign Sukuk, and Bridge Finance/Syndicated Loans.
Regarding Eurobonds, he indicated that Nigeria could raise part or all of the funds through sales in the International Capital Market (ICM).
President Tinubu emphasized that the ICM is accessible to countries like Nigeria, pointing to recent issuances by Côte d’Ivoire, Kenya, and Cameroon in 2024 as examples.
Concerning Sovereign Sukuk, the president mentioned that the government is considering a debut issuance of $500 million, supported by credit enhancement from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank Group.
Moreover, the Bridge Finance/Syndicated Loans option involves securing loans from international financial institutions such as Citigroup, Goldman Sachs, and JPMorgan, should Eurobond issuance be hindered by unfavorable market conditions.
The government plans to pursue these financing options concurrently, with a focus on Eurobond issuance for its relative speed and cost-effectiveness.
Utilization of Funds
Regarding the use of the funds, the president confirmed they will be allocated to key projects in priority sectors, including power, transport, agriculture, and defense.
He added that the proceeds would also strengthen external reserves through deposits into the Central Bank of Nigeria’s account, ultimately aiming to stabilize the Naira.
