NIGERIA’S President Bola Tinubu made an urgent plea to the Senate on Wednesday, seeking approval for a substantial $8bn external borrowing plan. This financial strategy, earmarked for the 2022-2024 period, is primarily intended to fortify essential sectors such as infrastructure, healthcare, education, and security within the country.
Africa’s economic powerhouse and the primary oil producer on the continent, Nigeria has grappled with mounting reliance on borrowed funds. This is attributed to reduced tax revenues and a decline in oil exports, which traditionally serve as its main source of foreign currency.
Tinubu, in his correspondence to the Senate, outlined the request for $7.86bn and 100 million euros (equivalent to $105.40 million), without specifying the funding sources for these allocations. Nigeria has previously engaged with international credit markets, issuing eurobonds and securing loans from institutions like the World Bank and African Development Bank to sustain its budgetary needs.
‘In view of the present economic realities facing the country, it has become imperative to use the external borrowing to bridge the financing gap which will be applied to key infrastructure projects including power, railway, health among others,’ highlighted Tinubu.
While the government emphasises a desire to stimulate investments as a means to create employment opportunities and build critical infrastructure, current circumstances dictate the necessity of external borrowing to meet pressing financial requirements.
Simultaneously, the Senate and House of Assembly are deliberating over a supplementary budget amounting to 2.176 trillion naira ($2.8bn). This supplementary budget aims to address immediate and crucial concerns, particularly in defence and security sectors.
Furthermore, Nigeria’s cabinet recently sanctioned a budget of 26.01 trillion naira ($34bn) for the upcoming fiscal year, with a significant portion allocated to interest payments, representing about one-third of the total budget.
It’s notable that a considerable 40 percent of Nigeria’s overall debt is sourced externally, signifying the country’s deepening reliance on international borrowing.
As the country navigates economic challenges and endeavours to address critical needs, President Tinubu’s appeal to the Senate underscores the urgency and significance of financial support to fortify Nigeria’s infrastructure, healthcare, and security sectors.
