President Bola Tinubu’s request to borrow $2.35 billion to cover a portion of the 2025 budget deficit has been approved by the House of Representatives.
Tinubu’s request to issue a $500 million debut sovereign sukuk in the international capital market (ICM) to finance infrastructure projects and diversify Nigeria’s funding sources was also approved by the green chamber on Wednesday.
After reviewing the committee’s findings on loans, aid, and debt management, the lower legislative chamber granted the president’s request.
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 president requested the national assembly’s consent early this month, claiming that the external borrowing is supported by sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003, which mandate legislative approval for new loans and refinancing agreements.
According to Tinubu, depending on the state of the market, the money would be raised through one or a mix of instruments like eurobonds, loan syndications, or bridge financing arrangements.
The federal government anticipates that the price of the new eurobonds will be in line with the current yields on Nigeria’s bonds that are already available on the foreign market, which range from 6.8 percent to 9.3 percent, depending on maturity.
Tinubu stated that the proposed $500 million sovereign sukuk will broaden Nigeria’s investor base and strengthen the country’s government securities market. He also added that the money raised would go towards funding the nation’s vital infrastructure projects.
According to the president, the federal government successfully borrowed more than N1.39 trillion for important infrastructure and road projects between 2017 and 2025 through domestic sukuk issuances, and the external sukuk would support domestic initiatives.
“It is imperative to open new sources of funding for the federal government and to deepen the FGN securities market. The proposal is for the house of representatives to approve the issuance of a stand-alone debut Sovereign Sukuk with or without credit enhancement (Guarantee) from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IsDB) Group,” Tinubu said in the letter to the national assembly.
The president further stated that 25 percent of proceeds from the sukuk may be used to repay high-cost existing debt, while the balance would be channeled into financing infrastructure.
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