morganaBLE Politics/Governance
The proposed $7.7bn external borrowing represents the foreign component of the N29.2tn new borrowing provision contained in the 2026 Appropriation Act.
KaNo—
President Bola Tinubu has asked the Senate to approve a proposed external borrowing of $7.7bn, equivalent to N10.79tn, as part of the Federal Government’s financing plan for the 2026 fiscal year.
The Senate on Wednesday commenced consideration of the request, referring it to the Committee on Local and Foreign Debts for detailed scrutiny.
The proposed borrowing is expected to contribute to financing the Federal Government’s projected N31.4tn budget deficit, raising fresh concerns about Nigeria’s growing public debt and increasing dependence on loans to fund annual expenditure.
Tinubu’s request was contained in a letter dated October 26, 2026, addressed to the President of the Senate, Godswill Akpabio.
The letter, which was read during Wednesday’s plenary, sought legislative approval to raise N10,790,366,835,481, equivalent to $7,707,404,882.49, based on the 2026 budget exchange rate of N1,400 to the dollar.
Following the presentation of the letter, Akpabio referred the proposal to the Senate Committee on Local and Foreign Debts and directed it to submit its report as soon as practicable.
The proposed $7.7bn external borrowing represents the foreign component of the N29.2tn new borrowing provision contained in the 2026 Appropriation Act.
According to the President, the approved borrowing plan comprises N18.4tn in domestic loans and N10.79tn in external financing to part-finance the country’s projected N31.4tn budget deficit.
“The 2026 Appropriation Act approved the sum of N29.2tn as new borrowings to part-finance the 2026 budget deficit of about N31.4tn,” the letter stated.
Explaining the legal basis for the request, Tinubu said the proposed borrowing was in compliance with Sections 21(1) and 27(1) of the Debt Management Office (Establishment, etc.) Act, 2003.
The provisions require the Federal Government to submit proposals for external borrowing to the National Assembly for approval before proceeding with the arrangements.
The President explained that the government intended to explore different financing options simultaneously, taking into consideration the cost of borrowing, the benefits of each option and the time required to access the funds.
However, he indicated that the government would give priority to Eurobond issuance because of its relatively faster processing time and capacity to generate substantial funds.
“In view of this, emphasis will be on the issuance of Eurobonds, which is typically faster to conclude. Additionally, a larger amount can be raised through Eurobonds at a relatively lower cost in respect to the terms and conditions of the Eurobond,” he stated.
Other financing options identified in the letter include concessional and commercial loans from multilateral and bilateral institutions, facilities from the International Monetary Fund, bridge financing arrangements from book runners, loan syndications and direct borrowing from international financial institutions.
Tinubu, however, acknowledged that the final interest rates, repayment periods and other conditions attached to the proposed loans would depend on prevailing market conditions when the financing arrangements were concluded.
He said the Federal Ministry of Finance and the Debt Management Office would work together to negotiate favourable terms and ensure that Nigeria secured the best possible borrowing conditions.
“The final terms and conditions, interest rate and tenors can only be determined at the time of pricing. They will all be subject to market conditions prevailing at the time.
“The Federal Ministry of Finance and the Debt Management Office will ensure that Nigeria secures the best terms and conditions within the context of the market,” the President said.
On the proposed utilisation of the funds, Tinubu said the external financing would support critical projects and programmes captured in the 2026 Appropriation Act.
He listed defence and security, transportation, agriculture, power, education and healthcare among the priority sectors expected to benefit from the proposed borrowing.
According to him, the additional funds would provide the resources needed to implement key budgetary programmes and sustain the macroeconomic reforms being pursued by his administration.
The President also argued that the foreign currency proceeds from the borrowing would contribute to strengthening Nigeria’s external reserves.
He explained that the funds would be received by the Central Bank of Nigeria on behalf of the Federal Government, resulting in an increase in the country’s foreign reserves.
Tinubu said the anticipated accretion to the reserves would provide additional support for the naira and strengthen Nigeria’s external position.
Under the proposed resolution, the President is seeking authorisation to raise the N10.79tn through one or more of the identified financing channels, with particular emphasis on issuing Eurobonds.
Reacting to the request, Akpabio emphasised the importance of negotiating favourable terms with prospective lenders, warning against entering into borrowing arrangements without carefully examining their economic implications.
He said the government must ensure that any agreement reached would be beneficial to Nigeria, particularly in view of the country’s repayment obligations.
“So we have to go out there and search for the best terms, and that’s what they may call a win-win seller, win-win buyer approach,” the Senate President said.
Akpabio subsequently referred the request to the Committee on Local and Foreign Debts, which is expected to examine the proposed financing arrangements, available borrowing options and the conditions under which the Federal Government intends to access the funds.
The committee’s findings will inform the Senate’s decision on whether to approve the President’s request.
The latest borrowing proposal comes amid persistent concerns over Nigeria’s rising public debt, increasing debt-servicing costs and the government’s reliance on loans to finance budget deficits.
Successive administrations have resorted to domestic and external borrowing to bridge revenue shortfalls and finance infrastructure and development projects.
However, the growing debt burden has continued to attract public scrutiny, particularly over the proportion of government revenue devoted to servicing existing obligations.
Although the Federal Government has maintained that borrowing remains necessary to finance critical projects and support economic growth, questions persist over the sustainability of the country’s debt profile and the capacity of borrowed funds to generate sufficient economic returns.
The Senate’s consideration of the $7.7bn request is therefore expected to renew discussions about the balance between financing development priorities through borrowing and ensuring that Nigeria’s debt obligations remain manageable.
