By Godsgift Olubori
The Nigerian Senate is poised to approve President Bola Tinubu’s request for a $2.2 billion loan to address part of the N9.1 trillion deficit in the 2024 federal budget. This borrowing is part of the government’s broader strategy to stabilize finances and fund critical economic initiatives.
Loan Details and Legislative Action
President Tinubu submitted his loan proposal alongside the Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) for 2025–2027. In a letter read during Tuesday’s plenary sessions in both the Senate and the House of Representatives, Tinubu emphasized the urgency of legislative approval to align with the fiscal roadmap.
The proposed loan, equivalent to N1.77 trillion, is integrated into the 2024 Appropriation Act. According to the Act, N7.83 trillion of the budget deficit is allocated for borrowing, with N6.06 trillion from domestic sources and N1.77 trillion from external avenues like this new request.
Senate President Godswill Akpabio urged the Committee on Local and Foreign Loans to expedite their review, with a report due within 24 hours. “The Presidential request for $2.2 billion is already enshrined in the external borrowing plan for the 2024 fiscal year,” Akpabio noted, highlighting the importance of swift legislative action.
Insight on Fiscal Context
The loan request coincides with other major fiscal initiatives from Tinubu’s administration. The MTEF/FSP outlines projections for the 2025 budget, which totals N47.9 trillion. Key assumptions include a $75 oil price benchmark, daily crude production of 2.06 million barrels, and an exchange rate of N1,400 to $1. These parameters aim to achieve a GDP growth rate of 6.4% by 2025.
In addition to the loan, the Tinubu administration has proposed amendments to the Social Investment Programme framework to enhance transparency. This legislative push seeks to better target beneficiaries and improve the efficiency of social welfare initiatives, which are integral to combating poverty and inequality across Nigeria.
Strategic Financial Measures
To finance the loan, Nigeria plans to leverage various international funding mechanisms, including eurobonds and sukuk bonds. Approximately $1.7 billion is expected to come from eurobond sales, with $500 million from sukuk offerings. The government will decide the final funding mix based on prevailing market conditions
This borrowing falls in line with efforts to finance critical economic reforms and sustain growth. However, analysts have raised concerns about Nigeria’s rising debt levels, urging prudence in managing the nation’s borrowing strategy.
The Senate is expected to formalize its approval during today’s session, signaling a critical step in the government’s fiscal agenda for 2024.
