Nigeria’s debt profile hits N138trn as Senate approves fresh N1.767trillion loan for Tinubu

…as Atiku says loans bringing insufferable pressure on the economy

By Tunde Opalana

Nigeria’s debt profile will rise to a staggering N138 trillion as the Senate on Thursday approved a N1.767 trillion fresh loan request by President Bola Tinubu.

With Thursday’s loan approval, total loan obtained by the Tinubu’s administration in 19 months will totalled N50 trillion.

Nigeria’s debt before May 2023 was estimated at N87.3 trillion.

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The fresh loan approval came barely Forty Eight (48) hours after receipt of request from President Bola Tinubu for , N1.767trillion loan, equivalent of $2.209billion

Recall that President Tinubu on Tuesday in separate letters to both chambers of the National Assembly , requested for approval of N1.767trillion loan for part funding of N9.7trillion deficit in the N28.7trillion 2024 budget .

This borrowing, part of Nigeria’s budgetary financing plan, is aimed at addressing a portion of the ₦9.17 trillion fiscal deficit in the 2024 budget.

The President’s letter, addressed to Senate President, Godswill Akpabio highlighted that the request is in line with the provisions of Sections 21(1) and 27(1) of the Debt Management Office (DMO) Establishment Act, 2003. The borrowing plan had already been approved by the Federal Executive Council (FEC).

The correspondence also provided detailed terms and conditions for the issuance of Eurobonds in the international capital market to raise the required sum.

President Tinubu authorized the Honorable Minister of Finance and Coordinating Minister of the Economy, alongside the DMO, to take all necessary steps to execute the plan upon National Assembly approval.

Upon receipt of the request , the Senate mandated its committee on Local and Foreign debts to expeditiously work on it and report back within 24 hours .

Presenting the report at plenary, the Chairman of the committee , Senator Aliyu Wammako ( APC Sokoto North ) proposed the approval of the loan request.

Senator Wammako in the report , titled ” Implementation of New External Borrowing of N1, 767, 610, 321, 779.00 equivalent to $ 2.209billion in the 2024 Appropriation Act through the issuance of Eurobonds and other sources , said the presidential request was very necessary for approval .

According to him, the requested loan , is planned for execution of ongoing projects and programmed in the 2024 Appropriation Act which are critical for growth and development.

” It will contribute to the implementation of the Debt Management Strategy which seeks to reduce the cost of borrowing , lengthen the maturity of the public debt stock , free – up space in the domestic market for other borrowers and help increase Nigeria’s External Reserves .”, he explained”.

He added that Nigeria could raise all or part of the New External Borrowing of $2.21billion through the issuance of Eurobonds in the International Capital Market ( ICM) .

The Committee recommended thus : “That the Senate do approve the implementation of the New External Borrowing of One Trillion, Seven Hundred and Sixty Seven Billion, Six Hundred and Ten Million, Three Hundred Twenty-One Thousand, Seven Hundred and Seventy-Nine Naira (41,767, 610,321,779.00) (equivalent of USD2,209,512,902.22b) at the Budget Exchange rate of USD1.00/800 in the 2024 Appropriation Act and that the amount should be raised from one or more sources.

” Namely; issuance of Eurobonds in the ICM, Issuance of debut sovereign Sukuk in the ICM, & Bridge/ syndicated loans, subject to market conditions.

“Based on availability and cost, to issue Eurobonds in the sum of USD1.70 billion or more, but not more than USD2,209,512,902,.22b, approved as New External Borrowing in the 2024 Act.

“Given the significant increase in the official exchange rate from USD1.00/800 to approximately 41,640, it is recommended that the exchange rate excess resulting from this adjustment be exclusively utilized for implementation of capital projects in 2024.

“This will ensure that additional funds are directed to infrastructure & developmental projects that will contribute to the Nation’s long term growth and stability”.

The Senate after presentation of the report , expeditiously approved it at the committee of supply without any dissenting voice .

In his remarks after the approval , the Deputy President of the Senate , Senator Jibrin Barau who presided over the session, commended the Wammako led committee for a job well done .

However, former Vice President, Atiku Abubakar criticized President Tinubu’s loans as bone-crushing to Nigerians.

He added that loans are bringing insufferable pressure on the economy.

According to him, the recent report released by the World Bank, showing Nigeria as the third most indebted country to the International Development Association (IDA), is very concerning.

In a statement on Thursday, Atiku said this report is coming just when the government has already sent a proposal to the National Assembly signalling an intention to borrow an additional N1.7tn being shortfall in the 2024 budget through Euro Bonds.

“What makes this particular loan proposal even more concerning is that it is benchmarked at the exchange rate of 1 USD to N800, whereas the current exchange rate from the Central Bank of Nigeria stands at over N1,600 to 1 USD.

“Nigeria is sinking further in debt, and the National Assembly has become an accomplice once more. Tinubu had, in July this year, boasted that the FIRS and Customs under his watch have collected all-time high revenues to finance the Budget. Why then are they still borrowing? There is something that they are not telling Nigerians, even as they are being crushed by a combination of their failed trial-and-error policies and loan rackets.

“These Tinubu’s loans are bone-crushing to Nigerians and bringing insufferable pressure on the economy, especially when they are not properly negotiated and utilized.

“It is concerning that the voracious appetite for these humongous loans is powered by corruption and not for infrastructure and development needs. A report by Budgit, a budget watchdog, has disclosed that the 2024 Budget is a mess because of the level of pork associated with it.

“I feel a sense of personal agony seeing that just a few years after the administration of President Obasanjo took our country out of foreign indebtedness, we are today back at the top spot in the same conundrum

“It is time that we apply more caution and apply arithmetic to the loan frenzy,” he said.