President Bola Tinubu has requested the National Assembly’s approval to secure external loans of $21.5bn and ¥15 billion, along with a grant of €65 million, as part of the federal government’s proposed 2025–2026 external borrowing plan.
The president’s request was contained in a letter read by the Senate President, Godswill Akpabio, during the plenary on Tuesday.
In the letter, Mr Tinubu explained that the funds will be used to generate employment, promote skill acquisition, enhance entrepreneurship, reduce poverty, and boost food security.
He emphasised that the proposed projects and programmes are designed to have a nationwide impact, spanning all 36 states of the federation and the Federal Capital Territory (FCT).
After reading the letter, Mr Akpabio referred the request to the Senate Committee on Local and Foreign Debt. He directed the committee to review the proposal and present its findings to the Senate within two weeks.
Nigeria’s public debt has increased in recent years, raising concerns about the country’s fiscal sustainability.
As of the first quarter of 2024, Nigeria’s total public debt stood at N121.67 trillion (approximately $91.46 billion), up from N97.34 trillion in the fourth quarter of 2023. This increase was primarily due to new domestic borrowing to fund the 2024 budget deficit and disbursements from multilateral and bilateral lenders.
The Debt Management Office recently announced that Nigeria’s external debt had risen to $42.12 billion by the end of Q1 2024, while domestic debt stood at N65.65 trillion (about $49.35 billion). This has led to a debt-to-GDP ratio of 55 per cent as of June 2024, up from 42.4 per cent in December 2023.
The rising debt has resulted in increased debt servicing costs. In 2023, Nigeria spent N7.8 trillion on debt servicing, a 121 per cent increase compared to N3.52 trillion in the previous year. These high debt servicing costs have diverted funds from important sectors such as infrastructure and social services, potentially hindering economic growth and development.
Despite these challenges, President Tinubu’s administration continues to pursue external financing to support development initiatives.(Premium Times)
