The Nigerian Senate has approved a $2.21 billion loan request from President Bola Ahmed Tinubu to partially fund the country’s N9.7 trillion deficit in the N28.7 trillion 2024 budget. The approval, equivalent to N1.767 trillion at the budget exchange rate of N800 per dollar, was granted during a plenary session on Thursday.
The loan request, submitted to the National Assembly earlier in the week, was swiftly reviewed by the Senate Committee on Local and Foreign Debts, chaired by Senator Aliyu Wammako (APC Sokoto North). The committee presented its report within 24 hours, emphasizing the necessity of the loan to sustain ongoing projects and achieve critical developmental goals outlined in the 2024 Appropriation Act.
Loan Justification and Purpose
Senator Wammako, in his report, explained that the loan would help implement Nigeria’s Debt Management Strategy, aimed at reducing borrowing costs, extending the maturity of public debt, and increasing external reserves. The funds, he said, are earmarked for infrastructure and other capital projects crucial for the nation’s long-term growth and stability.
“The requested loan will contribute to the implementation of the Debt Management Strategy, which seeks to reduce borrowing costs, lengthen debt maturity, free up domestic market space for other borrowers, and help increase Nigeria’s external reserves,” Wammako noted.
The report recommended that the loan be raised through multiple channels, including:
- The issuance of Eurobonds in the International Capital Market (ICM).
- Sovereign Sukuk bonds in the ICM.
- Bridge or syndicated loans, depending on market conditions.
Exchange Rate Adjustments
The committee also addressed the implications of the recent significant increase in Nigeria’s official exchange rate, from N800 per dollar to approximately N1,640. It recommended that the excess funds generated from this adjustment be dedicated exclusively to capital projects in 2024, ensuring additional investment in infrastructure and developmental initiatives.
Senate’s Swift Approval
The Senate unanimously approved the committee’s recommendations without dissent. Deputy Senate President Jibrin Barau, who presided over the session, commended Senator Wammako and the committee for their diligent and expeditious handling of the request.
“This decision reflects our commitment to ensuring the success of key national projects and the implementation of a sustainable fiscal strategy,” Barau remarked.
Broader Economic Context
The approved loan forms part of broader efforts by the Tinubu administration to address Nigeria’s fiscal challenges and implement its 2024 budget. While the move has been described as critical for economic growth, it also underscores the government’s reliance on external borrowing to bridge significant funding gaps.
As Nigeria raises funds through the international capital market, the focus will now shift to ensuring that the loan delivers tangible results, particularly in infrastructure development and economic stability.