Senate Begins Scrutiny Of Tinubu’s $7.7bn External Loan Request

The Senate has begun considering President Bola Tinubu’s request for approval to secure an external loan of $7.7bn, equivalent to N10.79tn, referring the proposal to its Committee on Local and Foreign Debts for detailed examination.

The proposed borrowing forms part of the Federal Government’s financing plan for the 2026 fiscal year and is expected to contribute to funding a budget deficit estimated at N31.4tn.

Tinubu’s request, contained in a letter dated October 26, 2026, and addressed to the President of the Senate, sought approval to raise N10,790,366,835,481, equivalent to $7,707,404,882.49, at the budget exchange rate of N1,400 to the dollar.

The letter was read during Wednesday’s plenary, after which Senate President Godswill Akpabio referred the request to the Committee on Local and Foreign Debts, directing it to report back as soon as practicable.

The proposed $7.7bn external borrowing represents the foreign component of the N29.2tn new borrowing provision in the 2026 Appropriation Act.

According to Tinubu, the approved borrowing plan comprises N18.4tn in domestic loans and N10.79tn in external financing to part-finance the projected N31.4tn budget deficit.

“The 2026 Appropriation Act approved the sum of N29.2tn as new borrowings to part-finance the 2026 budget deficit of about N31.4tn,” the letter stated.

Explaining the legal basis for the request, the President cited Sections 21(1) and 27(1) of the Debt Management Office (Establishment, etc.) Act, 2003, which require external borrowing proposals to be submitted to and approved by the National Assembly.

Tinubu said the Federal Government would explore several financing options simultaneously, taking into account borrowing costs, the benefits of each option and the time required to access the funds.

However, he indicated that greater attention would be given to Eurobond issuance because of its relatively faster processing time and capacity to generate substantial funds.

“In view of this, emphasis will be on the issuance of Eurobonds, which is typically faster to conclude. Additionally, a larger amount can be raised through Eurobonds at a relatively lower cost in respect to the terms and conditions of the Eurobond,” he stated.

Other financing options listed in the letter include 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 acknowledged, however, 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.

“The final terms and conditions, interest rate and tenors can only be determined at the time of pricing. They will all be subject to market conditions prevailing at the time.

“The Federal Ministry of Finance and the Debt Management Office will ensure that Nigeria secures the best terms and conditions within the context of the market,” he said.

On the proposed utilisation of the funds, Tinubu 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 resources for implementing key budgetary programmes while consolidating the macroeconomic reforms and gains recorded by his administration.

He also said the foreign currency proceeds would contribute to Nigeria’s external reserves, as the funds would be received by the Central Bank of Nigeria on behalf of the Federal Government.

According to him, the anticipated increase in reserves would provide additional support for the naira and strengthen the country’s external position.

Under the proposed resolution, Tinubu is seeking authorisation to raise the N10.79tn through one or more of the identified financing channels, with particular emphasis on Eurobond issuance.

Reacting to the request, Akpabio stressed the need for the Federal Government to negotiate favourable borrowing conditions and ensure that any agreement reached with prospective lenders would benefit Nigeria.

He cautioned against accepting loan arrangements without adequately examining their economic implications and repayment obligations.

“So we have to go out there and search for the best terms, and that’s what they may call a win-win seller, win-win buyer approach,” the Senate President said.

The committee is expected to scrutinise the proposed financing arrangements, available borrowing options and the conditions under which the Federal Government intends to access the funds before the Senate takes a final decision.

The request comes amid persistent concerns over Nigeria’s rising public debt, debt-servicing obligations and increasing reliance on borrowing to finance annual budget deficits.

While the Federal Government maintains that borrowing is necessary to bridge revenue shortfalls and fund critical infrastructure and development projects, questions remain about the sustainability of the country’s debt profile and whether borrowed funds can generate sufficient returns to justify their cost.