By Emmanuel Nduka
President Bola Tinubu has formally requested the approval of the Nigerian Senate for a new external borrowing plan amounting to $2.2 billion.
The request was made in a letter addressed to Senate President Godswill Akpabio, which was read during Tuesday’s plenary.
The letter, titled “Request for the Resolution of the National Assembly for the Implementation of External Borrowing of About $2.2 Billion in the 2024 Appropriation Act,” outlines the President’s plan to secure the funds to help finance Nigeria’s 2024 budget deficit of N9.179 trillion.
Tinubu said his request is in line with the Debt Management Office (DMO) Act of 2003, specifically Sections 21(1) and 27(1), and has already received the approval of the Federal Executive Council.
In his letter, Tinubu explained that the funds, amounting to N1.7 trillion (at an exchange rate of N800 to $1), would be used to bolster the implementation of key projects in the 2024 budget. These projects, aimed at stabilizing the economy, focus on priority sectors including power, transport, agriculture, defense, and security.
He also emphasized that the loan proceeds would be deposited into the Central Bank of Nigeria (CBN) account, potentially strengthening the country’s external reserves and supporting the value of the naira.
“I write to request for a resolution of the National Assembly to raise the sum of N1.7 trillion, equivalent of 2.2 billon dollars at the budget exchange rate of one dollar to N800 provided as new external borrowing in the 2024 appropriation act to part finance the budget deficit of N9.179 trillion,” the president wrote.
The president noted that the funds would be raised through a mix of commercial sources, such as Eurobonds, Sovereign Sukuk, and the International Capital Market (ICM).
Nigeria has a history of issuing Eurobonds, having raised $16.92 billion to date, with $15.12 billion still outstanding.
Other countries like Cote d’Ivoire, Benin, Kenya, and Cameroon have also tapped into the ICM for similar borrowings in 2024. As part of the borrowing strategy, Nigeria is also considering a debut Sovereign Sukuk of up to $500 million, with credit enhancement from the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC).
The president’s letter also mentioned the appointment of lead managers, including Citigroup Global Markets Ltd, Goldman Sachs, JP Morgan, and Standard Chartered, to advise on the Eurobond issuance, should it proceed.
