The Federal Ministry of Finance has clarified the purpose and significance of the request made by President Bola Tinubu to borrow about N40.5 trillion.
This clarification was contained in a statement issued on Wednesday by the Director, Information and Public Relations of the Ministry, Mohammed Manga.
President Tinubu had approached the National Assembly on Tuesday seeking legislative approval of the amount to fund priority projects in key areas of development such as education, health, agriculture and unemployment.
The President, sought to raise up to $2 billion through the issuance of foreign currency-denominated financial instruments in Nigeria’s domestic debt market in tandem with a Presidential Executive Order signed in October 2023.
He contended that his request was based on Section 44 (1) and (2) of the Fiscal Responsibility Act 2007 and item 1(7) of his executive order, which requires National Assembly approval for all new borrowings and the appropriation of their proceeds.
He explained that the proceeds would be invested in key sectors of the economy to stimulate growth, infrastructure, job creation, and foreign exchange earnings, adding that the strategy was meant to diversify government funding sources, stabilise the naira, and deepen the local financial market.
Tinubu, in the second request, also unveiled the borrowing plan amounting to $21.5 billion, €2.2 billion, 15 billion Japanese yen and a €65 million in grants for the year 2025-2026
He said, “In the light of the removal of the fuel subsidy and its impact on the national economy, approval is called for the borrowing plan, which amounts to USD21,543,647,912, and EUR2,193,856,324.54. And in Japanese Yen, 15 billion Yen and a grant of €65 million, respectively.
“This initiative aims to generate employment, promote skill acquisition, foster entrepreneurship, reduce poverty, and enhance food security, as well as to improve the livelihoods of Nigerian. Majority of these projects and programs will be implemented across all 36 states and the Federal Capital Territory,” he said.
Tinubu also requested that the National Assembly approve the issuance of Nigerian federal bonds worth N757.98 billion in the domestic market to offset outstanding pension liabilities under the Contributory Pension Scheme as of December 31, 2023.
The president said that the request was critical, following the federal government’s persistent non-compliance with several provisions of the Pension Reform Act (PRA) 2014.
Providing clarification on the proposed borrowing, the Finance Ministry said, the plan is an essential component of the Medium-Term Expenditure Framework (MTEF) in accordance with both the Fiscal Responsibility Act 2007 and the DMO Act 2003.
The Ministry explained that the plan outlines the external borrowing framework for both the federal and sub-national governments over a three-year period, accompanied by five detailed appendices on the projects, terms and conditions, implementation period, etc.
“By adopting a structured, forward-looking approach, the plan facilitates comprehensive financial planning and avoids the inefficiencies of ad hoc or reactive borrowing practices.
“This strategic method enhances Nigeria’s ability to implement effective fiscal policies and mobilize development resources. The borrowing plan does not equate to actual borrowing for the period.
“The actual borrowing for each year is contained in the annual budget. In 2025, the external borrowing component is US $1.23 billion, and it has not yet been drawn. This is planned for H2 2025.
“Also, the plan is for both federal and several state governments across numerous geopolitical zones including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States. Importantly, it should be noted that the Borrowing Rolling Plan does not equate to an automatic increase in the nation’s debt burden,” it said.
The Ministry further explained that the nature of the rolling plan means that borrowings are split over the period of the projects.
“For example, a large proportion of projects in the 2024. – 2026 rolling plan have multi-year draw downs of between 5 – 7 years which are project-tied loans.
“These projects cut across critical sectors of the economy, including power grids and transmission lines, irrigation for improving food security, fibre optics network across the country, fighter jets for security, and rail and road infrastructure,” it added.
It noted that the majority of the proposed borrowing will be sourced from Nigeria’s development partners, including the World Bank, African Development Bank, French Development Agency, European Investment Bank, JICA, China EximBank, and the Islamic Development Bank.
“These institutions offer concessional financing with favourable terms and long repayment periods, thereby supporting Nigeria’s development objectives sustainably,” it said.
The Ministry reiterated that the debt service to revenue ratio has started decreasing from its peak of over 90% in 2023.
“The government has ended the distortionary and inflationary ways and means. There are significant revenue expectations from the Nigerian National Petroleum Corporation (NNPC), and technology-enabled monitoring and collection of surpluses from Government Owned Enterprises and revenue-generating ministries, departments, and agencies, including legacy outstanding dues.
“Having achieved a fair degree of macroeconomic stabilization, the overarching goal of the Federal Government is to pivot the economy onto a path of rapid, sustained, and inclusive economic growth.
“Achieving this vision requires substantial investment in critical sectors such as transportation, energy, infrastructure, and agriculture.
“These investments will lay the groundwork for long-term economic diversification and encourage private sector participation. Our debt strategy is therefore guided not solely by the size of our obligations, but by the utility, sustainability, and economic returns of the borrowing.
“Ensuring that all borrowed funds are efficiently utilized and directed toward growth-enhancing projects remains a top priority.
“In conclusion, the government remains committed to keeping borrowing within manageable and sustainable limits in accordance with the DMO Debt Sustainability Framework.
“The ongoing tax reform agenda, and other revenue initiatives, will further improve revenue generation and prudent financial management.
“We reaffirm our dedication to fiscal discipline, transparency, and accountability.
“Constructive public engagement and legislative oversight are vital components of our journey toward long-term economic stability and inclusive national prosperity,” the Ministry said.
