On Wednesday, the National Assembly approved President Bola Tinubu’s request to secure $2.347 billion from the international capital market. The funds will help part-finance the 2025 budget deficit and refinance maturing Eurobonds. Therefore, the government can meet critical fiscal obligations while stabilizing the economy.
$500 Million Sovereign Sukuk to Fund Infrastructure
Additionally, the Assembly approved the President’s plan to issue a $500 million debut sovereign sukuk in the international capital market. This sukuk will fund infrastructure projects and diversify Nigeria’s financing sources. Consequently, it provides new opportunities to attract international investors.
Legislative Consideration and Approval
The approval followed careful review by the committees on aids, loans, and debt management. In the House of Representatives, the Committee on Aids, Loans, and Debt Management, led by Hon. Abubakar Hassan Nalaraba, presented its report. Then, during plenary presided over by Speaker Rt. Hon. Tajudeen Abbas, the House adopted the report and approved the borrowing request.
Details of the External Borrowing
The House approved external borrowing worth N1,843,669,786,987.16, equivalent to $1,229,113,000 at the budget exchange rate of $1 = N1,500. The funds will partially finance the 2025 budget deficit of N9,276,348,934,935.79.
President Tinubu earlier requested the loan under the Debt Management Office (Establishment) Act, 2003. Sections 21(1) and 27(1) of the Act require legislative approval for new loans and refinancing arrangements. The government will raise funds using one or a combination of instruments, including Eurobonds, loan syndications, or bridge financing facilities, depending on market conditions.
Impact on Nigeria’s Economy
These initiatives will strengthen Nigeria’s fiscal capacity. By refinancing Eurobonds and raising additional funds, the government can ensure the completion of essential projects. Moreover, introducing a sovereign sukuk provides a new financing tool. This will help attract investors and stimulate economic growth. Furthermore, these steps improve Nigeria’s financial credibility internationally.
Conclusion
In conclusion, the National Assembly’s approval of $2.347 billion in external borrowing and the $500 million sukuk highlights Nigeria’s focus on fiscal responsibility and infrastructure development. By part-financing the budget deficit and refinancing maturing debts, the government supports economic stability. In addition, new financing instruments like the sukuk strengthen investment opportunities. Overall, these measures promote growth and enhance the country’s financial standing globally.
