The Senate has commenced consideration of President Bola Tinubu’s request for approval to obtain a $7.7bn (N10.79tn) external loan to support the implementation of the Federal Government’s 2026 budget.
The request was presented during plenary on Wednesday and subsequently referred to the Senate Committee on Local and Foreign Debts for detailed consideration.
Senate President, Godswill Akpabio, directed the committee to examine the proposal and submit its report as soon as practicable.
Tinubu’s request, conveyed in a letter dated October 26, 2026, seeks approval for external borrowing of N10,790,366,835,481, equivalent to $7,707,404,882.49, based on the budget exchange rate of N1,400 to the dollar.
The proposed borrowing represents the foreign component of the N29.2tn new borrowing provision approved in the 2026 Appropriation Act.
According to the President, the Federal Government plans to raise N18.4tn through domestic borrowing and N10.79tn from external sources to part-finance the projected N31.4tn budget deficit.
Tinubu explained that the request was made in accordance 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 the National Assembly for approval.
He disclosed that the government would explore different financing options, considering their costs, benefits and the time required to secure the funds.
However, he said priority would be given to Eurobond issuance because of its relatively faster processing and capacity to generate 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.
Other financing channels identified include 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.
The President noted that the final interest rates, repayment periods and other conditions would depend on prevailing market realities at the time the transactions were concluded.
He assured the Senate that the Ministry of Finance and the Debt Management Office would work together to negotiate favourable terms for Nigeria.
On the proposed utilisation of the funds, Tinubu listed defence and security, transportation, agriculture, power, education and healthcare as priority sectors expected to benefit from the borrowing.
He said the additional financing would provide resources for the implementation of critical projects and programmes under the 2026 Appropriation Act while supporting the consolidation of his administration’s macroeconomic reforms.
Tinubu also argued that the foreign currency proceeds would boost Nigeria’s external reserves, explaining that the funds would be received by the Central Bank of Nigeria on behalf of the Federal Government.
According to him, the anticipated increase in reserves would provide additional support for the naira and strengthen the country’s external position.
Reacting to the request, Akpabio urged the Federal Government to ensure that all borrowing arrangements were negotiated on favourable terms and adequately assessed before agreements were reached with prospective lenders.
He stressed that Nigeria must avoid unfavourable loan conditions and ensure that the arrangements served the country’s economic interests.
“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.
The committee's review will focus on the proposed financing arrangements, available borrowing options and the terms and conditions under which the Federal Government intends to access the funds before the Senate takes a final decision.
The proposed $7.7bn loan comes amid growing concerns over Nigeria’s public debt profile, rising debt-servicing costs and the government’s increasing dependence on borrowing to finance budget deficits.
Although the Federal Government has consistently defended borrowing as necessary to address revenue shortfalls and fund infrastructure and development projects, concerns remain over the sustainability of the country’s debt and the ability of borrowed funds to generate sufficient economic returns.
