The Senate on Wednesday opened deliberations on President Bola Tinubu’s request for approval to obtain a $7.7bn (₦10.79tn) external loan, sending the proposal to its Committee on Local and Foreign Debts for closer examination.
The planned borrowing is part of the Federal Government’s 2026 financing arrangement and is meant to help cover a budget deficit put at ₦31.4tn, a development that again places government borrowing and mounting debt obligations under legislative and public watch.
In a letter dated October 26, 2026 and addressed to the Senate President, Tinubu asked the National Assembly to authorise the raising of ₦10,790,366,835,481, which is equivalent to $7,707,404,882.49 at the budget exchange rate of ₦1,400 to the dollar.
The letter was read during Wednesday’s plenary, after which the Senate President, Godswill Akpabio, referred the request to the Committee on Local and Foreign Debts and asked it to report back as soon as practicable.
The $7.7bn external loan constitutes the foreign portion of the ₦29.2tn new borrowing provision in the 2026 Appropriation Act.
The President explained that the approved borrowing plan consists of ₦18.4tn in domestic loans and ₦10.79tn in external financing, all meant to part-finance the projected ₦31.4tn deficit.
“The 2026 Appropriation Act approved the sum of N29.2tn as new borrowings to part-finance the 2026 budget deficit of about N31.4tn,” the letter stated.
Justifying the request, Tinubu said it conforms with Sections 21(1) and 27(1) of the Debt Management Office (Establishment, etc.) Act, 2003, which require external borrowing proposals to be submitted to and approved by the National Assembly.
He disclosed that the Federal Government would pursue several financing options at once, weighing the cost of borrowing, the benefits of each option and the time needed to access the money.
He noted, however, that Eurobond issuance would get more attention because it can be concluded faster and can raise substantial funds.
“In view of this, emphasis will be on the issuance of Eurobonds, which is typically faster to conclude. Additionally, a larger amount can be raised through Eurobonds at a relatively lower cost in respect to the terms and conditions of the Eurobond,” he stated.
The letter listed other options, including concessional and commercial loans from multilateral and bilateral institutions, International Monetary Fund facilities, bridge financing from book runners, loan syndications and direct borrowing from international financial institutions.
Tinubu admitted that the final interest rates, repayment periods and other conditions would depend on market conditions prevailing when the financing arrangements are finalised.
He assured lawmakers that the Ministry of Finance and the Debt Management Office would work together to secure the most favourable terms for the country.
“The final terms and conditions, interest rate and tenors can only be determined at the time of pricing. They will all be subject to market conditions prevailing at the time.
“The Federal Ministry of Finance and the Debt Management Office will ensure that Nigeria secures the best terms and conditions within the context of the market,” the President said.
On how the money would be used, Tinubu said the loan would support key projects and programmes captured in the 2026 Appropriation Act.
He named defence and security, transportation, agriculture, power, education and healthcare as the priority sectors expected to benefit.
The President argued that the extra funds would supply the resources needed to carry out major budgetary programmes while consolidating the macroeconomic reforms and gains his administration has recorded.
He also defended the borrowing on the ground that the foreign currency proceeds would add to Nigeria’s external reserves.
According to him, the Central Bank of Nigeria would receive the funds on behalf of the Federal Government, resulting in an increase in the country’s foreign reserves.
Tinubu said the expected rise in reserves would give further support to the naira and strengthen Nigeria’s external position.
Under the proposed resolution, the President is seeking authority to raise the ₦10.79tn, equivalent to $7.7bn, through one or more of the identified financing channels, with particular emphasis on Eurobond issuance.
Responding to the request, the Senate President stressed that the Federal Government must negotiate favourable borrowing conditions and ensure that any deal reached with prospective lenders benefits Nigeria.
He warned against accepting loan arrangements without carefully studying their economic implications and the country’s repayment obligations.
“So we have to go out there and search for the best terms, and that’s what they may call a win-win seller, win-win buyer approach,” the Senate President said.
He then referred the request to the Committee on Local and Foreign Debts for thorough review, directing the panel to submit its report as soon as practicable.
The committee is expected to examine the proposed financing arrangements, the available borrowing options and the terms under which the Federal Government intends to access the funds, before the Senate takes a final position.
The latest request comes amid persistent concern over Nigeria’s rising public debt, debt-servicing obligations and growing reliance on borrowing to finance yearly budget deficits.
Although the Federal Government has consistently argued that borrowing is necessary to bridge revenue shortfalls and fund critical infrastructure and development projects, concerns remain over the sustainability of the country’s debt profile and the ability of borrowed funds to yield returns that justify their cost.
