Nigeria's debt to exceed $110bn as Tinubu asks National Assembly to approve more borrowing

NIGERIA'S public debt is set to exceed N180trn ($113.4bn) following President Bola Tinubu’s recent request to the National Assembly asking it to approve a set of additional external and domestic loans totalling N34.15trn ($21.5bn).

As part of a plan to make up for Nigeria's budget deficit, President Tinubu has asked lawmakers to approve more borrowing. In addition, he is also seeking approval of a domestic bond issuance of N757.9bn to settle outstanding pension liabilities.

In the separate letters to the Senate and House of Representatives, read at yesterday’s plenary, President Tinubu highlighted the strategic significance of the 2025/26 borrowing plan, noting that it spanned key sectors of the economy. He noted that the proposed borrowing is crucial, in light of removal of fuel subsidy and its economic implications.

President Tinubu said: “The 2025/26 borrowing plan covers all sectors, with specific emphasis on infrastructure, agriculture, health, education, water supply, growth, security and employment generation, as well as financial and monetary reforms, among others. In light of the significant infrastructure deficit in the country and 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.”

In his letter, President Tinubu assured lawmakers that the proposed funds will be channelled into critical infrastructure projects, especially in the areas of railways, healthcare and nationwide development programmes across all 36 states and the Federal Capital Territory. He added: “This initiative aims to generate employment, promote skill acquisition, foster entrepreneurship, reduce poverty, and enhance food security, as well as improve the livelihoods of Nigerians.”

In another letter, President Tinubu sought National Assembly approval for the issuance of federal government bonds in the domestic market to settle accrued pension liabilities under the Contributory Pension Scheme, amounting to N757,983,246,572. Citing the Pension Reform Act 2014, President Tinubu noted that the government had been unable to comply with some statutory pension obligations due to revenue challenges, leading to a build-up of arrears and increasing hardship for pensioners..

Nigeria’s total public debt rose by 48.6% to N144.66trn in 2024, from N97.34trn in 2023, with the federal government accounting for 95% of this.  Consequently, the additional borrowing, when combined with the N10.85trn borrowed from domestic investors from January to April this year, indicates an increase in total public debt to over N180trn.

As a result, the federal government's debt service-to-revenue ratio, a critical measure of the ability to repay loans, fell to 131% in the first two months of the year, from 118% in the January and February of 2024. With this deterioration in the debt service-to-revenue set to continue, given the additional borrowing sought by the president, analysts have expressed concern over the implication of the additional borrowing.