Tinubu Seeks $21.5bn New External Loan, N757.9bn Bond, Gives Reasons for Fresh Borrowing

• President Bola Tinubu wants to borrow over $20 billion and over N750 billion in domestic bonds to fund key sectors and settle pension arrears
• In the request plan, Tinubu said the funds will be used for infrastructure, health, education, and job creation
• The borrowing plan, according to the government, is necessary due to challenges from subsidy removal and revenue shortfalls

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

President Bola Tinubu has submitted a proposal to the House of Representatives seeking approval for an external borrowing plan totalling over $21.5 billion, alongside the issuance of N757.9 billion in domestic bonds.

The purpose of these financial measures, outlined in a letter read on the House floor on Tuesday, May 27, is to address critical infrastructure deficits and pension liabilities in Nigeria.

The borrowing plan will be from 2025–2026 and will be used for key sectors such as infrastructure, agriculture, health, education, water supply, security, and employment generation

President Tinubu, in the letter to lawmakers, spoke on the necessity of the loan.

In his address to the House, President Tinubu stated:

"In light of the significant infrastructure deficit in the country and the paucity of financial resources needed to address this gap amid declining domestic demand, it has become essential to pursue prudent economic borrowing to close the financial shortfall."

Breakdown of loan proposal

The proposed financing package includes USD 21,543,647,912( $21.5 billion), EUR 2,193,856,324.54(N757.9 billion) and 15 billion Japanese Yen, complemented by a EUR 65 million grant. The Nation reports

Tinubu said the funds are intended to promote employment, enhance skills, foster entrepreneurship, reduce poverty, and improve food security nationwide, BusinessDay reports.

Additionally, President Tinubu requested legislative backing for the issuance of domestic bonds to settle outstanding pension obligations under the Contributory Pension Scheme (CPS).

The accumulated arrears, amounting to N757,983,246,572, have strained the government's capacity to meet its statutory pension commitments, underscoring the urgent need for financial restructuring.

President Tinubu noted:

"The federal government has not been compliant with the implementation of the provisions of the Pension Reform Act 2014 due to revenue challenges, resulting in significant arrears and financial hardship for retirees."

The proposal has received approval from the Federal Executive Council, with President Tinubu emphasising its potential to restore trust in the pension system, improve retirees' welfare, and inject liquidity into the economy.

President Tinubu concluded in his letter:

"As we await the House of Representatives' deliberation and timely approval, I urge Your Honourable Speaker to consider the critical importance of these measures to our national economic recovery."

The House of Representatives is expected to deliberate on the proposed borrowing plan and bond issuance in the coming weeks.

Nigeria clears IMF debt

Legit.ng earlier reported that the Federal Government of Nigeria has fully settled its debt to the International Monetary Fund (IMF), leading the global financial body to remove Nigeria from its list of countries with outstanding obligations.

This development follows the final repayment of the principal amount of its $3.4 billion loan obtained under the IMF’s Rapid Financing Instrument (RFI).

Source: Legit.ng