The Senate on Thursday approved President Bola Tinubu’s request to borrow $2.2bn to partially fund the ₦9.7tn budget deficit for the 2024 fiscal year.
The approval followed a recommendation by the Senate Committee on Local and Foreign Debts. Chairman of the committee, Senator Aliyu Wamakko presented the report during plenary.
The plenary session, presided over by Deputy Senate President, Jibrin Barau, commended the committee “for its swift action and thorough examination of the loan request”.
In a letter to the bicameral legislature, President Bola Tinubu had described the loan as crucial to his administration’s fiscal strategy for the coming year.
The committee’s report, which estimated the $2.209bn as N1,767,610,321,779.00, said approval for the President’s request was necessary.
Chairman of the committee added that the loan would be used to execute some ongoing projects critical to the country’s development.
He said, “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.”
Wamakko said the country could raise the $2.21bn in part or in full through the issuance of Eurobonds in the International Capital Market.
Continuing, he said, “It can also be through issuance of debt sovereign Sukuk in the ICM and Bridge/syndicated loans, subject to market conditions.
“Based on availability and cost, to issue Eurobonds in the sum of USD1.70bn or more, but not more than USD2,209,512,902,.22bn, 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 utilised for the implementation of capital projects in 2024.
“This will ensure that additional funds are directed to infrastructure and developmental projects that will contribute to the nation’s long-term growth and stability.”