Tinubu Seeks N’Assembly’s Approval to Borrow N1.8trn

•Submits 2025-2027 MTEF, transmits NSIP amendment Bill

Adedayo Akinwale in Abuja 

President Bola Tinubu Tuesday sought the approval of the National Assembly to raise the sum of N1,767,610,321,779, which is equivalent to $2.209 billion provided as new external borrowing in the 2024 Appropriation Act to finance the budget deficit of N9.179 trillion.

The letter, dated November 15, was read on the floor of the House on Tuesday by the Speaker, Hon. Tajudeen Abbas.

The president said: “In accordance with the provisions of Sections 21(1) and 27(1) of the Debt Management Office (DMO) (Establishment, Etc.) Act, 2003, and the approval of the Federal Executive Council, I write to request for a Resolution of the National Assembly to raise the sum of N1,767,610,321,779.00 (equivalent of $2,209,512,902.22 at the Budget Exchange Rate of USD1.00/N800) provided as New External Borrowing in the 2024 Appropriation Act to part finance the budget deficit of N9.179 trillion.

“The Right Honourable Speaker may wish to recall that the 2024 Appropriation Act approved the sum of N7,828,529,477,860.00 as New Borrowings to part-finance the 2024 budget deficit of N9.179 trillion. 

“The total New Borrowings of N7.828 trillion was further subdivided into New Domestic Borrowing of N6.061 trillion and New External Borrowing of N1.767 trillion (Table 1). The latter is the subject of this request.

“The plan is to raise the New External Borrowing of $2.21 billion from a combination of commercial sources: Issuance of Eurobonds, Issuance of debut Sovereign Sukuk in the International Capital Market (ICM) and Bridge Finance/Syndicated Loans.”

The president explained that Nigeria could raise all or part of the new external borrowing of $2.21 billion through the issuance of Eurobonds in the ICM. 

Tinubu noted that Nigeria has been a regular issuer in the ICM and had raised $16.92 billion out of which $15.12 billion is outstanding. 

He stressed that the ICM is now open to countries similar to Nigeria, and so far, Cote d’Ivoire, Benin, Kenya, and Cameroon have issued Eurobonds in the ICM in 2024.

The president said: “Issuance of Sovereign Sukuk with a Guarantee from the ICIEC. A debut Sovereign Sukuk of up to USD500 million in the ICM with credit enhancement from the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC), a member of the IsDB Group, subject to the terms and conditions.”

The president noted that Bridge Finance/Syndicated Loans by the International Bookrunners/Joint Lead Managers (Citigroup Global Markets Ltd, Goldman Sachs, JP Morgan and Standard Chartered) that have been appointed through an open competitive bid to advise on the Issuance of Eurobonds, where it becomes necessary. 

He clarified that this option would only be used if for any reason the issuance of Eurobonds is delayed due to market conditions, because  there is an urgent need for funds. 

Tinubu emphasised that the precedent for accessing Bridge Finance/Syndicated Loan is that the proceeds of the Eurobonds would be used to offset the loan.

He stated: “The Right Honourable Speaker may further wish to note all the options will be pursued simultaneously for the capital raising of USD2.21 billion considering the costs, relative benefits, and timing of each of them to the country. However, emphasis will be on the Issuance of Eurobonds (Option 1) which is typically faster to conclude. Additionally, a larger amount can be raised through Eurobonds at a relatively lower cost.

“Conditions of the proposed External Borrowings, the Right Honourable Speaker may note that because all the Options are market related, the Final Terms and Conditions (Interest Rate and Tenors) can only be determined at the point of Issuance of the Eurobonds and Sukuk, and negotiation with lenders in the case of Bridge Finance/Syndicated Loan. They will all be subject to market conditions prevailing at that time. 

“The Federal Ministry of Finance and the Debt Management Office, working with the Transaction Advisers appointed by the Federal Government through Open Competitive Bidding, will ensure that Nigeria secures the best Terms and Conditions within the context of the market. Meanwhile, the Indicative Terms and Conditions for Eurobonds, which can be used as a guide is attached as Appendix I for your information.”

The president said the funds are needed to give more impetus to the ongoing implementation of the projects and programmes in the 2024 Appropriation Act, which were designed to stabilise the economy and put it on the path of sustainable growth and development. 

He pointed out that the key projects to which the proceeds would be deployed from the priority sectors of the economy, such as power, transport, agriculture, defence and security. 

The president explained that the proceeds would increase the accretions to the external reserves as the proceeds would be received into the Central Bank of Nigeria’s Account, and thereby support the naira exchange rate.

He noted: “As stated in Paragraph 1 above, the Right Honourable Speaker may wish to note that the Resolution of the NASS in the attached format (Appendix II) is required to comply with the provisions of the DMO Act and implement the New External Borrowing of N1,767,610,321,779.00 (equivalent of USD2,209,512,902.22 at the Budget Exchange Rate of USD1.00/N800) in the 2024 Appropriation Act to part finance the budget deficit.

“In view of the foregoing, especially with respect to the provisions of Sections 21 (1) and 27 (1) of the DMO Act, a specific Resolution of the NASS is required to implement the New External Borrowing in the 2024 Appropriation Act as stated in Paragraphs 1 and 7. 

“Accordingly, the House of Representatives is invited to consider and approve a resolution in the format outlined hereunder, which is also attached as Appendix II:

“To implement the New External Borrowing of N1,767,610,321,779.00 (equivalent of USD2,209,512,902.22 at the Budget Exchange Rate of USD1.00/N800) in the 2024 Appropriation Act and that the amount should be raised from one or more sources, namely: Issuance of Eurobonds in the ICM, Issuance of debut Sovereign Sukuk in the ICM, and Bridge Finance/Syndicated Loans subject to market conditions, including time to market;

“Based on availability and costs, to issue Eurobonds in the sum of USD1.70 billion or more, but not more than USD2,209,512,902.22 approved as New External Borrowing in the 2024 Appropriation Ac.”

The president stressed that the Minister of Finance and Coordinating Minister of the Economy, working with the Debt Management Office, are authorised to take all relevant and necessary actions required to give effect to this resolution of the National Assembly.

Meanwhile, the president has also submitted the 2025-2027 Medium-term Expenditure Framework And Fiscal Strategy paper to the National Assembly.

The president’s letter read by the Speaker said: “It is with pleasure that I forward herewith, the 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF&FSP) for the kind consideration and approval by the House of Representatives. 

“The 2025- 2027 (MTEF&FSP) was approved during the Federal Executive Council (FEC) meeting of 10th November, 2024.

“The Senate is invited to note that, as the 2025 budget of the federal government will be prepared based on the parameters and fiscal assumptions of the approved 2025-2027 (MTEF&FSP), it is imperative to seek National Assembly’s expeditious legislative action on this submission.

“While I trust that the House of Representatives will consider this submission expeditiously. Please accept, Rt. Honourable Speaker, the assurances of my highest regards.”

Also Tuesday, Tinubu transmitted the National Social Investment Programme Agency (Establishment) (Amendment) Bill 2024 for consideration of the National Assembly.

The president explained that the purpose of the bill is to make the National Social Register the primary targeting tool for the implementation of social investment programmes of government. 

This, he said, would ensure the country’s social welfare programmes are data driven and implementation processes are transparent, targeted, dynamic and effective in delivering social protection benefits to vulnerable Nigerians.

Tinubu said: “Pursuant to Section 58(2) of the Constitution of The Federal Republic of Nigeria 1999 (as amended), I forward, herewith, for the kind consideration and passage by the House of Representatives, the National Social Investment Programme Agency (Establishment) (Amendment) Bill, 2024, for the amendment of the National Social Investment Programme Agency Act, 2023.

“While hoping that the House of Representatives will consider this submission in the usual expeditious manner, please accept, Rt. Hon. Speaker, the assurances of my highest consideration.”