Nigerian senate approves Tinubu's $21bn borrowing plan to fund the budget deficit

NIGERIA'S senate has  approved President Bola Tinubu’s external borrowing plan of over $21bn for the 2025/26 fiscal year to plug the deficit between treasury revenue and spending projections thus enabling the government to meet its budgetary ambitions.

In February this year, Nigeria's National Assembly approved the 2025 budget, totalling ₦54.99trn ($36.6bn), representing a significant increase from the initially proposed ₦49.7trn. Dubbed the Budget of Restoration by government ministers, this budget aimed to address key sectors, stimulate economic growth and enhance public services.

However, with over 90% of Nigerian government revenue coming from the sale of crude oil, income is heavily dependent on high petroleum prices. With the price of Brent Crude still below $70 a barrel, Nigeria has struggled to raise the revenue required to fund its budget, thus forcing the government to resort to borrowing.

Nigeria's 2025 budget is predicated on the country selling 2.062m barrels of crude oil at $75 dollars per barrel and with output stuck at about 1.5m barrels a day and petroleum selling for less than 470 a barrel, there is a huge void to fill. President Tinubu thus has had no choice but to seek further borrowing if he wants to meet the budgetary targets outlined in the 2025 Appropriation Act.

This new $21.19bn comprehensive borrowing package includes direct foreign loans and is made up of funding that includes sums of €4bn, ¥15bn, a $65m grant and domestic borrowing through government bonds, totalling approximately ₦757bn. It also includes a provision to raise up to $2bn through a foreign-currency-denominated instrument in the domestic market.

Yesterday, the borrowing plan was approved after the presentation of a report by the chairman of the Senate Committee on Local and Foreign Debt, Senator Aliyu Wamako. He noted that the plan was first submitted to the National Assembly on May 27 but was delayed due to legislative recess and documentation issues from the Debt Management Office.

Senator Olamilekan Adeola, the chairman of the Senate Committee on Appropriations, said most of the loan requests had already been factored into the Medium-Term Expenditure Framework and the 2025 budget.

He added: “The borrowing is already embedded in the 2025 Appropriation Act. With this approval, we now have all revenue sources, including loans, in place to fully fund the budget."