$21.5bln loan request is Nigeria's external borrowing plan for 2024–2026, FG clarifies

Zawya

3 days ago

The Federal Government has clarified that Tuesday's $21.5 billion communication by President Bola Tinubu to the National Assembly was a formal request for consideration and approval of the 2024–2026 External Borrowing Rolling Plan, which includes the State Governments.
It explained that a borrowing plan does not amount to taking a $21.5 billion loan but only shows a plan of what can be borrowed and where the loans will come from for specific projects that are important to the Federal and State governments, including what will be borrowed by the Federal Government in 2025.
Additionally, the Federal Government noted that the proposed Borrowing Rolling Plan is an essential component of the Medium Term Expenditure Framework (MTEF), in accordance with both the Fiscal Responsibility Act 2007 and the Debt Management Office (DMO) Act 2003.
According to Government, the Plan outlines the external borrowing framework for both the federal and sub-national governments over a three-year period, accompanied by five detailed appendices on the projects, terms and conditions, implementation period, etc.
In a statement on Wednesday, Mohammed Manga, Director, Information and Public Relations in the Federal Ministry of Finance, said by adopting a structured, forward-looking approach, the plan facilitates comprehensive financial planning and avoids the inefficiencies of ad hoc or reactive borrowing practices.
'This strategic method enhances Nigeria's ability to implement effective fiscal policies and mobilize development resources. The borrowing plan does not equate to actual borrowing for the period. The actual borrowing for each year is contained in the annual budget.
'In 2025, the external borrowing component is US $1.23 billion, and it has not yet been drawn. This is planned for H2 2025.
'Also, the plan is for both Federal and several State governments across numerous geopolitical zones including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States.
'Importantly, it should be noted that the Borrowing Rolling Plan does not equate to an automatic increase in the nation's debt burden. The nature of the rolling plan means that borrowings are split over the period of the projects.
'For example, a large proportion of projects in the 2024–2026 rolling plan have multi-year drawdowns of between 5 to 7 years, which are project-tied loans. These projects cut across critical sectors of the economy, including power grids and transmission lines, irrigation for improving food security, fibre optics network across the country, fighter jets for security, and rail and road infrastructure,' Manga stated.
He informed that the majority of the proposed borrowing will be sourced from Nigeria's development partners, including the World Bank, African Development Bank, French Development Agency, European Investment Bank, JICA, China EximBank, and the Islamic Development Bank, as these institutions offer concessional financing with favourable terms and long repayment periods, thereby supporting Nigeria's development objectives sustainably.
The government reiterated that the debt service-to-revenue ratio has started decreasing from its peak of over 90 percent in 2023, and it has ended the distortionary and inflationary ways and means.
It highlighted that there are significant revenue expectations from the Nigerian National Petroleum Company Limited (NNPCL), and technology-enabled monitoring and collection of surpluses from Government Owned Enterprises (GOE) and revenue-generating ministries, departments, and agencies, including legacy outstanding dues.
'Having achieved a fair degree of macroeconomic stabilization, the overarching goal of the Federal Government is to pivot the economy onto a path of rapid, sustained, and inclusive economic growth.
'Achieving this vision requires substantial investment in critical sectors such as transportation, energy, infrastructure, and agriculture. These investments will lay the groundwork for long-term economic diversification and encourage private sector participation.
'Our debt strategy is therefore guided not solely by the size of our obligations, but by the utility, sustainability, and economic returns of the borrowing. Ensuring that all borrowed funds are efficiently utilized and directed toward growth-enhancing projects remains a top priority,' the Government further explained.
Manga underlined that the government remains committed to keeping borrowing within manageable and sustainable limits in accordance with the DMO Debt Sustainability Framework.