Nigeria’s total public debt is projected to increase to N155.1 trillion following the Senate’s approval of President Bola Tinubu’s request for an additional $6 billion external loan facility.
The approval, granted within a few hours of the President’s request being presented at plenary, adds an estimated N8.4 trillion to the country’s debt stock, based on an exchange rate of N1,400 to one dollar. This raises the debt figure from N146.69 trillion recorded at the end of 2025 to approximately N155.1 trillion. �
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Economic analysts have, however, expressed concerns over the implications of the fresh borrowing, particularly the foreign exchange risks and the likely pressure it may place on the Federal Government’s debt service-to-revenue ratio, already estimated at 60 per cent.
The Senate’s approval came barely three and a half hours after Senate President Godswill Akpabio read the President’s letter seeking legislative backing for the loan request.
The request was passed after the consideration of a report presented by Senator Aliyu Wammakko, Chairman of the Senate Committee on Local and Foreign Debts.
Breakdown of the Loan Request
President Tinubu’s request was conveyed in two separate letters to the Senate.
The first letter sought approval for the establishment of a $5 billion structured Total Return Swap (TRS) external financing programme with First Abu Dhabi Bank (FAB), United Arab Emirates.
According to the President, the facility will be made available in tranches and deployed for:
budget implementation
execution of priority infrastructure projects
refinancing of more expensive domestic and external debts
urgent fiscal obligations
The second request involved a $1 billion export finance facility from the United Kingdom, arranged by Citibank, London, specifically earmarked for the reconstruction and rehabilitation of the Lagos Port Complex and Tin Can Island Port. �
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Committee’s Position
Presenting the committee’s report, Senator Wammakko explained that the TRS facility is a derivative-based financing instrument governed by International Swaps and Derivatives Association (ISDA) rules.
He noted that the facility carries a six-year tenor, with a three-year break clause and annual rollover options subject to mutual agreement.
The committee also disclosed that the loan would be collateralised by naira-denominated Federal Government securities at 133.3 per cent, with monthly mark-to-market reviews and possible USD margin calls in the event of shortfalls.
Interest pricing was put at:
SOFR + 3.95% for the first tranche
SOFR + 4% for subsequent tranches
An upfront 1.5 per cent arranger fee is also payable per tranche.
The Senate committee stated that about 40 per cent of the facility will fund capital projects in the 2025 and 2026 budgets.
Experts Raise Concerns
Financial experts have warned that the new borrowing could expose Nigeria to significant exchange rate risks.
Tunde Abidoye, Head of Equity Research at Quest Merchant Bank, said the arrangement carries substantial currency risk because any depreciation of the naira would increase the government’s repayment burden.
He explained that if the naira weakens, the Federal Government may be required to cover the difference between the dollar-denominated loan value and the value of the collateralised naira bonds.
According to him, this would further worsen the nation’s debt servicing obligations and place more strain on public finances.
Similarly, David Adonri, Executive Vice Chairman of Highcap Securities Limited, warned that excessive external borrowing could mortgage the country’s future.
He stressed that financing the economy with foreign debt remains risky due to the uncertainty surrounding foreign currency earnings needed for repayment.
Calls for Transparency
Business executive Simon Tumba called on the Federal Government to be more transparent about its loan policy and repayment structure.
He raised concerns over possible overlaps in the financing arrangements for the Lagos ports rehabilitation project, noting that previous funding agreements had already been announced for the same purpose.
According to him, failure to manage the debt profile carefully could place the country at risk of long-term financial distress.
Atiku Criticises Senate’s Speedy Approval
Former Vice President Atiku Abubakar also criticised the Senate for what he described as a “lightning-speed approval” of the loan request.
He questioned the lack of extensive debate and scrutiny, describing the process as a disturbing sign of weakened legislative oversight.
Atiku warned that reckless borrowing without proper accountability could endanger Nigeria’s fiscal future. �
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Nigeria’s Debt Stock May Rise to N155.1trn as Senate Approves $6bn Loan Request
