The Nigerian Senate has approved President Bola Tinubu’s $2.2 billion loan request to partially finance the ₦9.7 trillion budget deficit for the 2024 fiscal year. The approval came during Thursday's plenary session following the submission of a report by the Chairman of the Senate Committee on Local and Foreign Debts, Aliyu Wamakko.
The approval process was swift, with the Senate Committee on Local and Foreign Debts presenting its findings within 48 hours of receiving the directive. Senate President Godswill Akpabio had earlier emphasized the urgency of the request, tasking the committee to expedite its review.
Deputy Senate President Jibrin Barau praised the committee’s diligence, saying their efforts demonstrated the Senate's commitment to Nigeria’s economic stability and development.
According to Wamakko’s report, the loan will fund critical projects outlined in the 2024 Appropriation Act. It aims to support infrastructure, enhance external reserves, and reduce the domestic borrowing burden. The funding is planned to be sourced through Eurobonds and other mechanisms in the International Capital Market, contingent on market conditions.
“The loan aligns with Nigeria’s Debt Management Strategy to reduce borrowing costs and lengthen the maturity of public debt while freeing up domestic market space for other borrowers,” Wamakko stated.
The approved loan will also leverage the recent adjustment in Nigeria's exchange rate. Wamakko proposed that surplus funds arising from the exchange rate shift should be allocated exclusively to capital projects in 2024, ensuring additional investments in infrastructure and developmental projects.
The committee recommended issuing Eurobonds amounting to $1.7 billion or more, capped at $2.2 billion. It also outlined alternative funding options, including sovereign Sukuk and syndicated loans. The approval reflects a budget exchange rate of ₦800 to $1.
With no opposition during the vote, the Senate endorsed the loan request at the Committee of Supply. The government is expected to proceed with raising the funds, which are deemed crucial for Nigeria's fiscal and developmental goals in the coming year.
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