The president of Nigeria, Bola Tinubu, recently reached out to the country’s National Assembly to approve a new round of borrowing composed of $21.54 billion, €2.19 billion, and ¥15 billion which he noted is aimed at supporting key sectors, including infrastructure, agriculture, healthcare, education, water resources, security, and public finance reforms.
This comes a few weeks after the country settled its financial obligations of $3.4 billion to the International Monetary Fund.
Additionally, the administration had announced the clearance of the country’s Ways and Means debt, totalling over N30 trillion, back in October 2024.
However, during the recent plenary, on Tuesday, Senate President Godswill Akpabio read a letter that contained the president’s request.
A description of the financial breakdown was also provided in the letter, but its contents were kept confidential.
According to a report by The Punch, the newly proposed loan would increase Nigeria’s current debt stock by approximately N38.24 trillion at the current official exchange rate of N1,583.74/$1, potentially causing Nigeria’s total public debt to rise from N144.67 trillion at the end of 2024 to over N182.91 trillion by 2026.
For more context, Nigeria’s external debt would rise from $45.78 billion to approximately $69.92 billion, an extra $24.14 billion, or a 52.7% increase, if the National Assembly approves the president’s plan.
This will raise the external debt component of Nigeria’s overall national debt to more than N108 trillion in the country’s local currency.
The scheme, which is part of the 2023 Presidential Executive Order on Foreign Currency-Denominated Financial Instruments, aims to improve foreign currency reserves, grow the domestic financial sector, draw in local dollar investments, and aid in exchange rate stabilization.
Nigeria’s World Bank loan under President Bola Tinubu
Since President Bola Tinubu’s administration took over, the World Bank has authorized approximately 11 loan projects for Nigeria worth $7.45 billion in less than two years.
According to data from the Debt Management Office, the World Bank held $17.32 billion of Nigeria’s external debt as of the third quarter of 2024.
Nigeria’s debt to the World Bank’s International Development Association (IDA) is $16.5 billion as of FY2024, making it Africa’s largest debtor and the world’s third-highest, according to the Bank’s financial statements.
Notably, in September 2024, the World Bank approved a $1.57 billion financing package for Nigeria as part of a new program aimed at boosting the country’s health and education sectors, as well as supporting resilience to climate change and sustainable power initiatives.
