President Bola Tinubu has officially submitted a request to the National Assembly seeking approval for a new external loan of ₦1.767 trillion to finance a significant budget deficit. The proposed loan, which is based on an exchange rate of ₦800 to $1, is part of the 2024 appropriation act, and is aimed at bridging a projected budget shortfall of ₦9.7 trillion.
The request was presented to lawmakers on Tuesday, November 19, by Speaker Tajudeen Abbass during a plenary session. This latest borrowing proposal comes shortly after the Federal Executive Council (FEC) approved a $2.2 billion loan tied to the same fiscal year budget. If the new external borrowing is approved, Nigeria’s external debt will rise to an estimated $45.1 billion by the end of 2024.
The proposal has raised concerns about the country’s growing debt burden. According to the Central Bank of Nigeria (CBN), $3.58 billion was spent on servicing Nigeria’s foreign debt in the first nine months of 2024, representing a 39.77% increase from $2.56 billion during the same period in 2023. These figures highlight the mounting pressure on Nigeria’s fiscal management and the long-term sustainability of its debt servicing obligations.
In defense of the loan request, President Tinubu argued that the external borrowing is crucial for filling the gaps in the 2024 budget. “The external loan is critical for plugging the gaps in the 2024 budget,” Tinubu emphasized in his letter to lawmakers. He called on the National Assembly to expedite approval in order to address the fiscal challenges facing the government.
In addition to the loan request, President Tinubu also sought legislative approval for amendments to the National Social Investment Agency (NSIA) Act. The proposed changes would make the social register the primary database for federal welfare initiatives, a move the president argued would enhance transparency and efficiency in the delivery of social programs.
“The amendment will enhance transparency and efficiency in implementing social programmes,” President Tinubu stated in his separate letter to lawmakers. This proposal is part of broader efforts by the government to improve the management and distribution of welfare resources to vulnerable Nigerians.
As Nigeria’s external debt continues to grow, experts have raised concerns about the long-term impact on the country’s fiscal health. While the government maintains that the new borrowing is necessary to address immediate budgetary challenges, economists warn that it could further strain the nation’s economic stability. Some critics have questioned whether the increase in external borrowing is sustainable, given the country’s rising debt servicing obligations.
The National Assembly is expected to begin deliberations on the loan request in the coming days. Lawmakers will need to carefully consider the potential risks and benefits of approving such a large external borrowing, especially as the country grapples with inflation, exchange rate volatility, and mounting debt. The outcome of these deliberations could have significant implications for Nigeria’s economic future.
