Reps approve Tinubu’s request to borrow $2.35bn, issue $500m sovereign sukuk

MaTaZ ArIsInG
Dallas, Texas

Abuja—The House of Representatives has approved President Bola Tinubu’s request to borrow $2.35 billion to finance part of the 2025 budget deficit.

It also granted the President’s request to issue a $500 million debut sovereign sukuk in the international capital market to fund infrastructure projects and diversify Nigeria’s financing sources.

The president’s approval came yesterday after consideration of report of the committee on aids, loans and debt management.

The green chamber approved the implementation of the new external borrowing of N1,843,669,786,987.16 (equivalent to $1,229,113,000.00) at the budget exchange rate of $1.00/N1,500 as provided as new external borrowing in the 2025 Appropriation Act, to part-finance the budget deficit of N9,276,348,934,935.79.

Early this month, the president had sought the approval of the National Assembly, saying the external borrowing was backed by provisions of sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003, which require legislative approval for new loans and refinancing arrangements.

Tinubu said the funds would be raised through one or a combination of instruments such as eurobonds, loan syndications, or bridge financing facilities, depending on prevailing market conditions.

He said the federal government expected the pricing of the new eurobonds to align with current yields on Nigeria’s existing bonds in the international market, ranging between 6.8 per cent and 9.3 per cent, depending on maturity.

On the proposed $500 million sovereign sukuk, Tinubu said the move would help diversify Nigeria’s investor base and deepen the government securities market.

According to him, the proceeds will support the development of critical infrastructure projects across the country.

The president said the federal government had successfully borrowed over N1.39 trillion through domestic sukuk issuances between 2017 and 2025 for key road and infrastructure projects, adding that the external sukuk would complement domestic efforts.

“It is imperative to open new sources of funding for the federal government and to deepen the FGN securities market.

”The proposal is for the House of Representatives to approve the issuance of a stand-alone debut Sovereign Sukuk with or without credit enhancement (Guarantee) from the Islamic Corporation for the Insurance of Investment and Export Credit, ICIEC, a member of the Islamic Development Bank, IsDB, Group,” Tinubu said in the letter to the National Assembly.

The president said 25 per cent of proceeds from the sukuk might be used to repay high-cost existing debt, while the balance would be channelled into infrastructure financing.

The borrowing plan forms part of President Tinubu’s fiscal strategy to strengthen foreign reserves, stabilise the naira, and fund critical infrastructure projects, amid rising debt obligations.

The approval by the House marks a major step toward implementing the external financing component of the 2025 Appropriation Act.

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