By Emmanuel Kwada
President Bola Ahmed Tinubu has formally requested the National Assembly’s approval for a new external borrowing plan amounting to N1.767 trillion, aimed at addressing the fiscal deficit within the proposed 2024 budget. The president’s request was conveyed through a letter directed to Senate President Godswill Akpabio and Speaker of the House of Representatives, Tajudeen Abbas, which was read during Tuesday’s plenary session.
The N9.7 trillion deficit identified in the 2024 budget framework
If granted, the fresh loan will constitute part of the N9.7 trillion deficit identified in the 2024 budget framework. The proposal has already received the green light from the Federal Executive Council (FEC), and the president affirms that it complies with the stipulations of Section 21(1) and 27(1) of the Debt Management Office Act.
In addition to seeking loan approval, President Tinubu has submitted the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for the years 2025-2027 to the legislature. He has also introduced an amendment bill to establish a National Social Investment Programme, which aims to streamline the federal government’s social welfare initiatives through a comprehensive social register.
Last week, the Federal Government approved a separate $2.2 billion external borrowing plan in an effort to manage ongoing economic challenges.
In the letter to the National Assembly, Tinubu explored three financing options to secure the necessary funds: the issuance of Eurobonds, Sovereign Sukuk, and Bridge Finance/Syndicated Loans.
The president highlighted the potential efficiency of fundraising through Eurobond sales in the International Capital Market (ICM), referencing successful issuances by Côte d’Ivoire, Kenya, and Cameroon earlier this year. This option is positioned as the primary method due to its relatively rapid execution and cost-effectiveness.
A $500 million Sovereign Sukuk issuance, which would benefit from the backing of the Islamic Corporation for the Insurance of Investment and Export Credit
Moreover, he detailed considerations for a $500 million Sovereign Sukuk issuance, which would benefit from the backing of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), part of the Islamic Development Bank Group.
Should any delays arise in Eurobond issuance owing to market fluctuations, the administration is prepared to seek loans from international financial institutions, including Citigroup, Goldman Sachs, and JPMorgan as part of its Bridge Finance/Syndicated Loans strategy.
Regarding the intended use of the funds, President Tinubu specified that the loan proceeds will be focused on critical sectors such as power, transportation, agriculture, and defense. Additionally, he emphasized the aim to improve external reserves by depositing funds into the Central Bank of Nigeria, which would help stabilize the nation’s currency.
The aim to improve external reserves by depositing funds into the Central Bank of Nigeria, which would help stabilize the nation’s currency
As Nigeria navigates its fiscal challenges, this borrowing plan underscores the administration’s commitment to leveraging international financing as a tool for economic recovery and infrastructural development in the upcoming year. The National Assembly is expected to deliberate on the president’s request i n the coming days.
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