By Chidimma Okwara,
ABUJA, NIGERIA—The House of Representatives has approved President Bola Ahmed Tinubu’s request to secure a total of $2.35 billion in external loans to finance part of the 2025 budget deficit and issue a $500 million debut sovereign Sukuk in the international capital market to fund infrastructure projects and diversify Nigeria’s financing sources.
The green chamber approved the implementation of the new external borrowing of N1,843,669,786,987.16 (equivalent to $1,229,113,000.00) at the budget exchange rate of $1.00/N1,500 as provided as new external borrowing in the 2025 Appropriation Act, to part-finance the budget deficit of N9,276,348,934,935.79.
The approval, granted after considering the report of the Committee on Aids, Loans, and Debt Management, is a crucial step in the government’s strategy to finance the 2025 budget deficit and proactively manage existing debt obligations.
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Breakdown of the $2.35 Billion External Loan
The total approved external borrowing request of approximately $2.347 billion is divided into two primary components:
New Budget Financing ($1.23 Billion): This portion, equivalent to ₦1.84 trillion at the budget exchange rate of ₦1,500 to $1, is intended to part-finance the projected ₦9.27 trillion deficit outlined in the 2025 Appropriation Act.
Eurobond Refinancing ($1.12 Billion): This amount is specifically allocated to redeem a $1.118 billion Eurobond issued in 2018, which is scheduled to mature in November 2025. This is a standard debt management practice aimed at preventing default and maintaining fiscal stability.
The government has been authorized to access these funds through a combination of instruments, including Eurobond issuance, syndicated loans, bridge financing facilities, or direct borrowing from international financial institutions, depending on market conditions.
Launching the Sovereign Sukuk
In addition to the traditional loan, the House also endorsed the plan to issue Nigeria’s first-ever $500 million Sovereign Sukuk (an Islamic financial bond) in the international capital market.
The primary goal of the Sukuk is to raise dedicated funds for critical infrastructure projects across the country, supplementing the resources already raised through domestic Sukuk issuances since 2017.
According to the President’s request, issuing the Sukuk will help to diversify Nigeria’s investor base and deepen the government securities market. Up to 25 per cent of the proceeds from the Sukuk may also be utilized to repay high-cost existing debt.
The request to the National Assembly was made pursuant to sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003, which requires legislative consent for new loans and refinancing arrangements. The approval by the House of Representatives clears the path for the executive to implement this comprehensive borrowing program to support the nation’s economic growth plans.
