Tinubu Seeks More Loans of $7.8bn and €100m, Pushing Nigeria’s Foreign Debt to $51 Billion

President Bola Tinubu has asked the Senate to approve his request to borrow an additional $7.8 billion and €100 million as part of his 2022-2024 borrowing plan. This will increase Nigeria’s foreign debt to about $51 billion, amid concerns over the country’s balance of payment crisis.

The President, in a letter read by Senate President Godswill Akpabio on Wednesday, said the request was based on an approval given by the previous administration of President Muhammadu Buhari in May 2023.

He said the loans were meant for projects and programmes in various sectors, such as infrastructure, agriculture, health, education, water supply, security and employment.

He also said that the African Development Bank (AfDB) and the World Bank Group (WBG) have indicated interest to assist Nigeria with $1 billion and $2 billion respectively, following the removal of fuel subsidy and its impact on the economy. He said these loans were in addition to the 2022-2024 external borrowing plan.

He assured the Senate that the projects and programmes were selected based on positive technical and economic evaluations and their expected contribution to the social and economic development of the country. He said the projects and programmes would be implemented in all the 36 states of the federation and the federal capital territory.

He added that the external borrowing was necessary to bridge the financing gap and fund key infrastructure projects, such as power, railway and health. He said the loans would help the government deliver its responsibilities to Nigerians through expeditious disbursement and efficient project implementation.

However, some financial analysts have debunked the official reasons given for the borrowing, claiming it was rather meant as a bridging loan to cushion the country’s current balance of payment crisis. They said Nigeria’s foreign debt, which stood at $43.2 billion as at June 2023, would rise further due to the depreciation of the naira. They said Nigeria’s domestic debt was also high at N54.1 trillion, bringing public debt to N113.4 trillion.

They warned that Nigeria’s debt burden was becoming unsustainable and could jeopardize its economic recovery and growth prospects.

Meanwhile, the World Bank Country Director for Nigeria, Shubham Chaudhuri, said on Wednesday that the bank has committed over $11 billion in the past three years to Nigeria’s governments at both the federal and sub-national levels. He said this while giving his goodwill message at a three-day cabinet retreat for ministers, presidential aides, permanent secretaries and top government functionaries in Abuja.

Chaudhuri assured President Tinubu of the bank’s continued support to Nigeria’s development agenda. He said the bank was working with Nigeria on various areas, such as human capital development, digital transformation, climate change adaptation and resilience, governance and institutions, private sector development and regional integration.

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