Tinubu Replaces $21.6 Billion Loan Request With Fresh $7.7 Billion Borrowing Plan
By NJORIGE LYNUS
PRESIDENT Bola Tinubu has withdrawn his earlier request for approval to process external loans worth $20.52 billion and €1.05 billion. Instead, he has submitted a fresh proposal seeking approval to raise approximately $7.7 billion to partly finance the 2026 budget deficit.
The new request, which amounts to $7,707,404,882.49, was contained in a letter read by Senate President Godswill Akpabio during Wednesday’s plenary.
According to the president, the proposed borrowing represents approximately ₦10.9 trillion at an exchange rate of $1 to ₦1,400. He said the funds would help finance the country’s budget deficit and support critical projects across several sectors.
New Loan to Support Key Sectors
Tinubu explained that the proposed facility would finance projects in infrastructure, defence, agriculture, healthcare, electricity and education.
He argued that the investments would strengthen the macroeconomic reforms and economic gains recorded by his administration. Furthermore, he said the new proposal provides clearer information about the sources of funds and the conditions under which the government intends to raise the money.
The president identified several possible financing options, including Eurobond issuance. However, he indicated that the government would give Eurobonds greater attention because they could provide access to larger amounts of money within a relatively shorter period and at comparatively lower costs.
In his letter, Tinubu said the government would pursue the available financing options simultaneously while assessing their costs, benefits and the time required to secure the funds.
He also explained that the final interest rates, repayment periods and other conditions would depend on market circumstances at the time of pricing. Consequently, the government could not determine those terms conclusively before accessing the international capital market.
Tinubu said the request complied with Sections 21(1) and 27(1) of the Debt Management Office (Establishment, etc.) Act, 2003, as well as the borrowing provisions contained in the 2026 Appropriation Act.
How the Loan Fits into the 2026 Budget
The president linked the proposed $7.7 billion facility to the external borrowing component of the 2026 budget.
According to his letter, the 2026 Appropriation Act provides for a budget deficit of approximately ₦31.4 trillion. It also authorises total new borrowing of ₦29.2 trillion to partly finance the deficit.
The approved borrowing comprises ₦18.4 trillion in domestic loans and approximately ₦10.79 trillion in external financing. Therefore, the new $7.7 billion proposal is intended to finance part of the external borrowing requirement.
Tinubu maintained that the funds would support programmes and projects already contained in the 2026 Appropriation Act.
Following the presentation, Akpabio referred the request to the Senate Committees on Local and Foreign Debts and Appropriations for detailed examination. He directed the committees to submit their reports as soon as practicable.
Withdrawal of Previous Borrowing Proposal
The latest request replaces an earlier communication in which Tinubu sought legislative approval to process external loans worth $20,517,755,901 and €1,045,083,643 under the 2026–2027 Supplementary External Borrowing Plan.
The earlier proposal covered projects in infrastructure, agriculture, healthcare, education, water supply, security and employment generation. It also included financial management reforms.
However, the president has now withdrawn that request in favour of the smaller $7.7 billion borrowing plan.
The development follows previous National Assembly approvals for major external financing arrangements. About five months earlier, lawmakers approved a $516.3 million loan from Deutsche Bank AG to finance the Sokoto–Badagry Superhighway.
The facility carries a nine-year repayment period, including a grace period of up to three years. Its interest rate is capped at the Chicago Mercantile Exchange’s Secured Overnight Financing Rate (SOFR) plus 5.3 per cent annually.
Additionally, the Islamic Corporation for the Insurance of Investment and Export Credit, the insurance arm of the Islamic Development Bank, provides insurance backing for the facility.
In March, the National Assembly also approved a $6 billion external borrowing plan. The arrangement included a proposed $5 billion facility from First Abu Dhabi Bank to support the national budget and a $1 billion UK export finance facility arranged by Citibank.
The latter facility was earmarked for the rehabilitation of Tin Can Island Port and the Lagos Port Complex.
Rising Debt & Revenue Concerns
The fresh borrowing proposal comes amid growing concerns about Nigeria’s public debt and the increasing cost of servicing government obligations.
Over the years, the Federal Government has relied heavily on domestic and external loans to finance budget deficits and infrastructure development. Consequently, the country’s debt burden has continued to attract public and economic scrutiny.
Although Nigeria’s debt-to-GDP ratio has generally remained moderate compared with that of some peer economies, analysts have questioned the government’s ability to service its obligations with a relatively limited revenue base.
A substantial portion of government revenue already goes towards debt servicing. As a result, fewer resources remain available for infrastructure, social services and other development priorities.
Both the International Monetary Fund and the World Bank have repeatedly urged Nigeria to strengthen revenue mobilisation, improve tax collection and ensure that borrowed funds support productive investments.
They have also emphasised the importance of generating sufficient economic returns from public investments to sustain debt repayment.
Nevertheless, the Federal Government maintains that external borrowing remains necessary to address infrastructure shortages, finance development programmes and meet budgetary obligations. Officials also argue that loans secured on favourable terms can help manage financing costs and support economic growth.
The proposed $7.7 billion facility must now undergo legislative scrutiny before the government can proceed with the borrowing arrangements.
