Nigeria’s public debt is set to surge beyond N180 trillion as President Bola Ahmed Tinubu formally requested the National Assembly’s approval for a new external and domestic borrowing package totaling N34.15 trillion. This new loan request comes amid a backdrop of rising debt service costs and persistent economic challenges.
Breakdown of the New Borrowing Plan
In two separate letters to the Senate and House of Representatives, President Tinubu requested:
External loans totaling $21.5 billion, equivalent to N33.39 trillion using the official exchange rate of N1,590/$1.
A domestic bond issuance of N757.98 billion to clear outstanding pension liabilities under the Contributory Pension Scheme (CPS).
The President explained that the proposed 2025–2026 borrowing plan is aimed at addressing Nigeria’s urgent development needs, particularly in sectors such as infrastructure, agriculture, health, education, water supply, security, and job creation.
Specifics of the External Facility
The borrowing plan includes:
USD 21,543,647,912
EUR 2,193,856,324.54
15 billion Japanese Yen
A grant of 65 million EUR
President Tinubu emphasized the importance of borrowing prudently, citing the removal of fuel subsidies and limited domestic resources as justification for the financial initiative. He noted that the new loans would be channeled into key infrastructure projects such as railways, healthcare services, and economic development programs across the 36 states and the FCT.
Pension Bond to Settle Arrears
In a related proposal, the President sought approval for N757.98 billion in bond issuance to settle longstanding pension arrears. He cited the Pension Reform Act of 2014, acknowledging the federal government’s past non-compliance with statutory pension obligations due to revenue constraints.
Tinubu stated that settling these pension liabilities would:
Improve the welfare of retirees
Inject liquidity into the economy
Restore public confidence in the pension system
The bond issuance has already received the Federal Executive Council’s approval during its meeting on February 4, 2025.
Legislative Consideration
The requests were formally read at the National Assembly plenary by Senate President Godswill Akpabio and Speaker of the House Tajudeen Abbas. The borrowing plans have been referred to:
Senate Committee on Local Debts
House Committees on National Planning, Economic Development, and Pensions
Implications: Debt Surges and Rising Concerns
According to the Debt Management Office (DMO), Nigeria’s total public debt rose by 48.6%, from N97.34 trillion in 2023 to N144.66 trillion in 2024, with the Federal Government responsible for N137.28 trillion of the total. When combined with N10.85 trillion borrowed domestically between January and April 2025, total debt could now exceed N180 trillion.
Additionally, Nigeria’s debt service-to-revenue ratio has deteriorated sharply:
131% in Jan–Feb 2025, up from 118% in the same period of 2024, despite a 13% YoY increase in revenue.
Economic Experts Raise Caution
Tunde Abidoye, Head of Equity Research at FBNQuest Merchant Bank, warned that the scale of the new external loan—nearly half of Nigeria’s total external debt—raises concerns about debt sustainability and exchange rate risks.
Similarly, Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers, acknowledged the necessity of borrowing to bridge the budget deficit, but stressed the importance of Nigeria’s capacity to repay and the efficient use of borrowed funds.
Clifford Egbomeade, an economic analyst, stated that while the pension bond could stimulate consumption and relieve retirees, the external loans must be concessional and tied to productive sectors like agriculture and infrastructure. He added that transparency, reform, and revenue generation would be critical to avoid exacerbating fiscal strain.
Conclusion
President Tinubu’s request underscores the fiscal pressures facing Nigeria and the government’s reliance on borrowing to fund development goals and settle obligations. As the National Assembly begins its review, stakeholders await clarity on how the administration will ensure accountability, effective implementation, and long-term economic benefit from this massive debt expansion.
