The Nigerian Senate has formally commenced legislative scrutiny of President Bola Tinubu’s request to raise $7.7 billion in external borrowing, a sum equivalent to N10.79 trillion at the budget exchange rate. The proposal was referred to the Committee on Local and Foreign Debts for detailed consideration after the letter was read during Wednesday’s plenary session.
A Formal Request Tabled Before Lawmakers
The President’s request was contained in a letter dated October 26, 2026, addressed to the President of the Senate, Godswill Akpabio. In the correspondence, the President sought the National Assembly’s approval to raise N10,790,366,835,481, equivalent to $7,707,404,882.49, using the budget exchange rate of N1,400 to the dollar.
Following the reading of the letter, the Senate President referred the matter to the Committee on Local and Foreign Debts and directed the panel to report back as soon as practicable. The committee is expected to examine the proposed financing arrangements, the available borrowing options and the terms under which the Federal Government intends to access the funds before the Senate takes a final position on the request.
How the Loan Fits Into the 2026 Budget
The proposed external borrowing represents the foreign component of the N29.2 trillion new borrowing provision contained in the 2026 Appropriation Act. According to the President, the approved borrowing plan comprises N18.4 trillion in domestic loans and N10.79 trillion in external financing to part-finance the country’s projected N31.4 trillion budget deficit.
In the letter, the President explained that the 2026 Appropriation Act approved the sum of N29.2 trillion as new borrowings to part-finance the 2026 budget deficit of about N31.4 trillion. The request, therefore, seeks authorisation to raise the N10.79 trillion through one or more of the identified financing channels, with particular emphasis on Eurobond issuance.
Legal Basis for the Borrowing Request
Explaining the rationale behind the request, the President stated that the proposed borrowing complied with Sections 21(1) and 27(1) of the Debt Management Office (Establishment, etc.) Act, 2003. Those provisions require external borrowing proposals to be submitted to and approved by the National Assembly.
Financing Options Under Consideration
The President disclosed that the Federal Government would explore several financing options simultaneously, taking into consideration borrowing costs, the benefits of each option and the time required to access the funds. However, he indicated that Eurobond issuance would receive greater attention because of its relatively faster processing time and its capacity to generate substantial funds.
In his words, emphasis will be placed on the issuance of Eurobonds, which is typically faster to conclude, adding that a larger amount can be raised through Eurobonds at a relatively lower cost with respect to the terms and conditions of the instrument.
Other financing options identified in the letter included concessional and commercial loans from multilateral and bilateral institutions, facilities from the International Monetary Fund, bridge financing arrangements from book runners, loan syndications and direct borrowing from international financial institutions.
The President, however, acknowledged that the final interest rates, repayment periods and other loan conditions would depend on prevailing market conditions when the financing arrangements are concluded. He assured lawmakers that the Ministry of Finance and the Debt Management Office would work together to secure the most favourable terms for the country, noting that the final terms and conditions, interest rate and tenors can only be determined at the time of pricing and would be subject to market conditions prevailing at that time.
Priority Sectors Targeted by the Funds
On the proposed utilisation of the funds, the President said the external borrowing would support critical projects and programmes captured in the 2026 Appropriation Act. He identified defence and security, transportation, agriculture, power, education and healthcare as priority sectors expected to benefit from the financing.
The President argued that the additional funds would provide the resources required to execute key budgetary programmes while consolidating the macroeconomic reforms and gains recorded by his administration.
Expected Impact on External Reserves
The President also made a case for the borrowing on the grounds that the foreign currency proceeds would contribute to Nigeria’s external reserves. According to him, the funds would be received by the Central Bank of Nigeria on behalf of the Federal Government, leading to an accretion to the country’s foreign reserves. He said the anticipated increase in reserves would provide additional support for the naira and strengthen Nigeria’s external position.
Senate President Cautions on Borrowing Terms
Reacting to the request, the Senate President stressed the need for the Federal Government to negotiate favourable borrowing conditions and ensure that any agreement reached with prospective lenders would be beneficial to Nigeria. He cautioned against accepting loan arrangements without adequately examining their economic implications and the country’s repayment obligations.
Akpabio said the government must go out and search for the best terms, describing the objective as what may be called a win-win seller, win-win buyer approach.
Debt Sustainability Concerns Persist
The latest request comes against the backdrop of persistent concerns over Nigeria’s rising public debt, debt-servicing obligations and the increasing reliance on borrowing to finance annual budget deficits. Although the Federal Government has consistently maintained that borrowing is necessary to bridge revenue shortfalls and fund critical infrastructure and development projects, concerns remain over the sustainability of the country’s debt profile and the capacity of borrowed funds to generate returns that justify their cost.
The Senate’s decision on the request will therefore rest on the committee’s assessment of the financing options and the terms attached to them, with lawmakers expected to weigh the fiscal benefits against the long-term burden of repayment.
