Senate considers Tinubu’s N10.79tn foreign loan request

President Bola Tinubu wants the National Assembly to approve a new external borrowing limit of N10,790,366,835,481, equivalent to $7,707,404,882.49 at the budget exchange rate of N1,400 per dollar. The request covers foreign financing for the 2026 budget.

The approval would allow the government to raise the money through one or more channels. These include Eurobonds, concessional or commercial loans, IMF facilities, bridge financing, loan syndications and direct borrowing from international financial institutions. Tinubu placed particular emphasis on Eurobonds because they can be concluded faster and raise substantial funds.

The Senate has not approved the request yet. It referred the proposal to its Committee on Local and Foreign Debts for detailed consideration. The committee must report back as soon as practicable, while lawmakers will examine the proposed terms, costs and economic implications before a decision.

Nigeria’s proposed external borrowing totals N10.79 trillion, equal to $7.7 billion using the 2026 budget exchange rate of N1,400 to the dollar. That is a very large financing request, but it does not represent the government’s entire new borrowing plan.

The 2026 Appropriation Act provides for N29.2 trillion in new borrowing. Of that amount, N18.4 trillion is planned as domestic borrowing inside Nigeria, while N10.79 trillion is the foreign component. Together, those two amounts make up the approved new borrowing provision.

The borrowing is intended to help finance a projected N31.4 trillion budget deficit. The Senate is now reviewing only the external portion requested by Tinubu. Its committee will consider how the money could be raised, the costs involved and the conditions attached to any eventual financing.

An external loan is financing obtained from foreign investors, international institutions or governments outside Nigeria. It is commonly raised in a currency such as dollars, rather than naira. In this case, the government is considering Eurobonds and loans from multilateral or bilateral institutions.

Domestic borrowing is raised within Nigeria. The 2026 plan separates N18.4 trillion in domestic loans from N10.79 trillion in external financing. The external component would be received by the Central Bank of Nigeria for the Federal Government, while its exact lenders and final terms would depend on the selected financing channel.

The difference matters because foreign loans create obligations linked to foreign currencies and international market conditions. Domestic and external loans may also have different interest rates, repayment periods and access processes. Tinubu said those final conditions could only be determined when the financing is priced and concluded.

A budget deficit occurs when planned government spending exceeds expected revenue. Nigeria’s projected deficit for 2026 is about N31.4 trillion. Borrowing is therefore part of the Federal Government’s financing plan, rather than a separate project unrelated to the budget.

The 2026 Appropriation Act approved N29.2 trillion in new borrowing to part-finance that deficit. This consists of N18.4 trillion in domestic loans and N10.79 trillion in external financing. The proposed foreign borrowing would support programmes in defence and security, transportation, agriculture, power, education and healthcare.

The loan would not cover the entire deficit by itself. It would provide part of the resources needed to execute the approved budget. Tinubu also argued that foreign-currency proceeds would increase external reserves, support the naira and strengthen Nigeria’s external position, although the final borrowing terms remain unsettled.

A Eurobond is a bond sold in international capital markets, usually denominated in a major foreign currency. Despite its name, it does not necessarily mean the bond is issued in Europe or denominated in euros. It allows a government to seek funding from investors beyond its domestic market.

For Nigeria, a Eurobond could provide dollar-linked proceeds for the external borrowing plan. Tinubu said issuance is typically faster to conclude and can raise a larger amount at relatively lower cost, depending on the terms available. Other options include multilateral loans, IMF facilities, bridge financing and loan syndications.

The speed and final cost are not guaranteed. The President acknowledged that interest rates, repayment periods and other conditions would depend on market conditions when pricing occurs. The Finance Ministry and Debt Management Office are expected to seek the most favourable terms for Nigeria.

Additional foreign borrowing creates future obligations. Nigeria would need to repay the principal and interest, using public funds and foreign currency when payments fall due. That can reduce budget flexibility because more revenue may be committed to debt service instead of new programmes or emergencies.

The article gives a possible benefit as well. The foreign-currency proceeds would be received by the Central Bank of Nigeria and add to external reserves. Stronger reserves can support confidence in the naira and improve the country’s external position. However, if the naira loses value, the naira cost of repaying dollar-linked debt rises.

The final effect depends on the loan’s interest rate, maturity, currency and other conditions. Tinubu said these would be set at pricing and shaped by market conditions. The Senate President therefore stressed negotiating favourable terms and examining the economic consequences carefully.

These factors form a connected chain. Government borrowing provides money for spending, but interest rates determine the cost of that money. Higher rates increase future interest payments and can leave less room in the budget. Foreign borrowing also brings foreign currency into the country, which can add to external reserves.

Reserves give a country a buffer for international payments and can strengthen confidence in its currency. In the article, Tinubu argues that receiving the loan proceeds through the Central Bank of Nigeria would increase reserves and support the naira. That is the main mechanism linking the proposed borrowing to exchange-rate stability.

The relationship can also work in reverse. If the naira weakens against the dollar, repaying dollar-denominated debt costs more in naira. Higher repayment costs can reduce budget flexibility. The final outcome will depend on market interest rates, the borrowing terms, reserve changes and the naira’s future value.