The House of Representatives has approved President Bola Tinubu’s request to borrow $2.35 billion to finance part of Nigeria’s 2025 budget deficit. The approval, granted on Wednesday, also included authorisation for the issuance of a $500 million debut sovereign sukuk in the international capital market.
New Borrowing to Cover Budget Deficit
According to details obtained by Akahi News, the decision followed the consideration and adoption of a report submitted by the House Committee on Aids, Loans, and Debt Management.
The approved loan package includes the implementation of a new external borrowing of ₦1.84 trillion (approximately $1.23 billion) at the budget exchange rate of ₦1,500 to $1, as captured in the 2025 Appropriation Act.
This external financing will help bridge the ₦9.27 trillion budget deficit and support Nigeria’s fiscal operations amid sluggish revenue inflows and growing expenditure commitments.
Legal Backing and Justification
President Tinubu, in his request to the National Assembly, referenced Sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003, which mandate legislative approval for all new borrowings and refinancing arrangements.
According to Akahi News, the President explained that the funds would be raised through one or more financing options — including Eurobonds, loan syndications, or bridge facilities — depending on market conditions at the time of issuance.
He further clarified that the pricing of new Eurobonds would align with Nigeria’s existing bond yields in the international market, which currently range between 6.8% and 9.3%, depending on maturity.
Diversification Through Islamic Finance
In addition to conventional borrowing, Tinubu’s proposal sought approval for the issuance of a $500 million sovereign sukuk — an Islamic finance instrument that prohibits interest payments and promotes asset-backed transactions.
The President said the sukuk would not only diversify Nigeria’s investor base but also deepen the government’s securities market.
“It is imperative to open new sources of funding for the federal government and to deepen the FGN securities market,” Tinubu stated in his letter.
He added that the sukuk could be issued 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.
Economic Implications and Public Concerns
Analysts who spoke with Akahi News noted that while fresh external borrowings can support capital projects and stabilise the budget, Nigeria’s rising debt profile — which recently surpassed ₦97 trillion — remains a concern.
They urged the government to ensure that all loans are channelled towards productive infrastructure that can generate revenue and improve economic output.
Others commended the inclusion of sukuk financing, describing it as a step toward broadening Nigeria’s funding mix and attracting non-traditional investors from the Middle East and Asia.
The National Assembly’s approval marks another phase in President Tinubu’s efforts to stabilise public finances and attract foreign investment. However, fiscal experts warn that without strict transparency and accountability, Nigeria risks deepening its debt sustainability challenges.
For continued updates on national budget decisions and financial policy developments, visit Akahi News — your trusted source for verified news and expert analysis.
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