The house of representatives has approved President Bola Tinubu’s request to borrow $2.35 billion to finance part of the 2025 budget deficit.
The green chamber on Wednesday also granted Tinubu’s request to issue a $500 million debut sovereign sukuk in the international capital market (ICM) to fund infrastructure projects and diversify Nigeria’s financing sources.
The lower legislative chamber approved the president’s request after considering the report of the committee on aids, loans and debt management.
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.
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Early this month, the president sought the approval of the national assembly, saying the external borrowing is backed by provisions of sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003, which require legislative approval for new loans and refinancing arrangements.
Tinubu said the funds would be raised through one or a combination of instruments such as eurobonds, loan syndications, or bridge financing facilities, depending on prevailing market conditions.
He said the federal government expects the pricing of the new eurobonds to align with current yields on Nigeria’s existing bonds in the international market, ranging between 6.8 percent and 9.3 percent, depending on maturity.
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On the proposed $500 million sovereign sukuk, Tinubu said the move would help diversify Nigeria’s investor base and deepen the government securities market, adding that the proceeds will support the development of critical infrastructure projects across the country.
The president said the federal government had successfully borrowed over N1.39 trillion through domestic sukuk issuances between 2017 and 2025 for key road and infrastructure projects, and the external sukuk would complement domestic efforts.
“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 said 25 percent of proceeds from the sukuk may be used to repay high-cost existing debt, while the balance would be channelled into infrastructure financing.
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