Nigeria’s foreign debt is projected to increase to approximately $51 billion, following President Bola Tinubu’s request to the Senate for approval to borrow an additional $7.8 billion and €100 million as part of his 2022-2024 borrowing plan.
Some financial analysts have disputed the official rationale behind the borrowing, suggesting that it is primarily intended as a short-term loan to address the country’s current balance of payments crisis.
As of June 2023, Nigeria’s foreign debt stood at $43.2 billion, with domestic debt reaching N54.1 trillion, resulting in a total public debt of N113.4 trillion. With the president’s request for additional borrowing, coupled with the depreciation of the naira, the total public debt is projected to reach N130 trillion.
In a letter addressed to the Senate on Wednesday, the President explained that the request was based on approval granted by the previous President Muhammadu Buhari-led administration, following a Federal Executive Council meeting in May 2023. Senate President Godswill Akpabio read Tinubu’s request during a plenary session.
Tinubu’s letter states: “The Senate should take note that the previous administration approved the 2022-2024 borrowing plan during the Federal Executive Council meeting on May 15, 2023. The projects encompass various sectors, with a particular focus on infrastructure, agriculture, health, education, water supply, security, employment, and financial management reforms, among others.
“The total funding required for the projects and programs under the borrowing plan is $7,864,508,559 in dollars and €100 million in euros, respectively. It is worth noting that, following the removal of fuel subsidies and their impact on the country’s economy, the African Development Bank (AfDB) and the World Bank Group (WBG) have expressed interest in supporting the country with $1 billion and $2 billion, respectively, to mitigate economic challenges, in addition to the Federal Executive Council’s approved 2022-2024 external borrowing plan.
“As a result, the requested approval amounts to $7,864,508,559 in dollars and 1,000 million euros. I wish to emphasize that the projects and programs in the borrowing plan were selected based on positive technical and economic evaluations, as well as their expected contributions to the socio-economic development of the country. This includes generating employment, fostering skill acquisition, supporting the emergence of more entrepreneurs, reducing poverty, and ensuring food security to enhance the average Nigerian’s livelihood.
“These projects and programs will be implemented in all 36 states of the federation and the federal capital territory. Given the current economic challenges facing the country, it has become necessary to use external borrowing to bridge the financing gap, which will be directed towards critical infrastructure projects such as power, railways, and healthcare, among others.
“Considering the nature of these facilities and the urgency to restore normalcy to the country, I hereby request the Senate’s consideration and approval of the 2022-2024 external borrowing plan to enable the government to fulfill its responsibilities to Nigerians through prompt disbursement and efficient project implementation.”