The Nigerian Senate has approved a $2.2 billion loan request by President Bola Tinubu to address a significant deficit in the 2024 budget. This approval followed the recommendation of the Senate Committee on Local and Foreign Debts, chaired by Senator Aliyu Wamakko. The loan aims to cover the N9.7 trillion shortfall in the budget and is part of broader economic measures endorsed by the Federal Executive Council (FEC) .
The loan will be raised through international financial instruments, including Eurobonds and Sukuk financing. The Eurobonds will be denominated in a currency other than the naira and sourced from international capital markets, while the Sukuk will comply with Islamic financing principles. These instruments are seen as essential for ensuring competitive borrowing terms .
In presenting the report, Wamakko emphasized that the funds are critical for completing ongoing capital projects and implementing development programs under the 2024 budget. These initiatives are expected to stimulate national growth, reduce the cost of borrowing, and increase Nigeria’s foreign reserves .
The loan aligns with Nigeria’s debt management strategy, which focuses on reducing short-term borrowing, lengthening the maturity of public debt, and freeing up domestic capital for other borrowers. This strategy is considered essential for maintaining fiscal stability and attracting more international investment .
The Minister of Finance, Wale Edun, noted that the funding structure would be influenced by market conditions. Approximately $1.7 billion will be raised through Eurobonds, with the remaining $500 million sourced via Sukuk. The borrowing is pegged at an exchange rate of N800 to the dollar, reflecting current economic realities .
Critics have raised concerns about Nigeria’s rising debt profile, questioning the long-term sustainability of such loans. However, the government insists that these funds are necessary to support critical projects and maintain macroeconomic stability. Senators supporting the proposal argue that the loan is vital for ensuring the successful execution of the 2024 budget .
The loan approval marks another step in President Tinubu’s economic reform agenda, which has focused on addressing fiscal imbalances and boosting investor confidence. The Senate has promised to collaborate with the Ministry of Finance to ensure the funds are utilized transparently and effectively .
