Tinubu reneges on ‘no new borrowing’ promise less than a month after announcing it
By Jeph Ajobaju, Chief Copy Editor
Bola Tinubu has sought the approval of the House of Representatives for new external borrowing and debt refinancing amounting to $2.3 billion alongside the issuance of a $500 million debut sovereign Sukuk in the international capital market.
The President’s request was contained in a letter Speaker Tajudeen Abbas read out on the House floor at the resumption of plenary from recess on Monday.
The letter seeks resolution of the National Assembly (NASS) in line with Sections 21(1) and 27(1) of the Debt Management Office (DMO) Act, 2003 but comes less than a month after Tinubu beat his chest that his administration already achieved 2025 revenue target in August and would no longer need to borrow funds.
Recently disclosed Debt Management Office (DMO) data shows that he has obtained $10 billion external loans for Nigeria in the past two years, with only half the amount disbursed so far.
The loans have varying maturity (interest and principal payment) dates of up to 2058.
Separately, the African Democratic Congress (ADC) has quoted other official data to announce that the country’s total loan is currently $210 billion.
This is beside the $21 billion loan the Senate approved in July for Tinubu to obtain between 2025 and 2026.
Tinubu in his new quest told lawmakers that the new borrowing will help fund the 2025 Appropriation Act, refinance maturing Eurobonds, and diversify Nigeria’s funding sources through Islamic finance instruments.
He reiterated that the 2025 budget provides for $9.27 billion in total new borrowings to finance the year’s deficit, out of which $1.84 billion (N1.23 trillion at an exchange rate of N1,500/$) is earmarked for external loans.
He urged the lawmakers to authorise the Federal Government to source the funds through any of the following options:
- Issuance of Eurobonds
- Loan syndication
- Bridge financing from book runners
- Direct borrowing from international financial institutions
Tinubu said Nigeria’s $1.118 billion Eurobond, issued in 2018 at 7.625 per cent and maturing in November 2025, will be refinanced to avoid default.
“This is a standard practice in debt capital markets,” the letter stressed, arguing that refinancing through Eurobonds or syndicated loans would ensure debt sustainability and investor confidence.
He explained that the decision was inspired by the government’s “considerable success” in domestic Sukuk issuances, which have raised N1.39 trillion since 2017 for critical infrastructure, particularly road projects.
In his view, the proposed international Sukuk will help bridge the country’s infrastructure funding gap and deepen its investor base.
“If the ICIEC credit guarantee is utilised, 25% of the proceeds will be used to repay relatively expensive debt obligations, while the balance will finance pre-identified infrastructure projects.”
Tinubu assured the House that the Ministry of Finance and DMO would work closely with transaction advisers to secure the most favourable terms and pricing for all capital-raising efforts, subject to prevailing market conditions.
Read also:
