The Nigerian Senate has begun examining President Bola Ahmed Tinubu’s request for approval to secure an external loan of $7.7 billion (₦10.79 trillion) to help finance the 2026 budget.
The Senate referred the proposal to its Committee on Local and Foreign Debts on Wednesday for detailed consideration.
The proposed borrowing forms part of the Federal Government’s financing strategy for the 2026 fiscal year, which includes addressing a projected budget deficit of ₦31.4 trillion.
Tinubu’s request, contained in a letter dated October 26, 2026, was addressed to the President of the Senate, Godswill Akpabio.
The letter sought approval to raise ₦10,790,366,835,481, equivalent to $7,707,404,882.49, using the budget exchange rate of ₦1,400 to the dollar.
Akpabio read the letter during Wednesday’s plenary before referring it to the debt committee. He directed the panel to submit its report as soon as practicable.
External Loan Forms Part Of ₦29.2tn Borrowing Plan
According to the President, the proposed $7.7 billion represents the external component of the ₦29.2 trillion new borrowing provision in the 2026 Appropriation Act.
The borrowing plan comprises ₦18.4 trillion in domestic loans and ₦10.79 trillion in external financing.
Tinubu said the funds would help part-finance the country’s projected ₦31.4 trillion budget deficit.
“The 2026 Appropriation Act approved the sum of N29.2tn as new borrowings to part-finance the 2026 budget deficit of about N31.4tn,” the letter stated.
The President cited Sections 21(1) and 27(1) of the Debt Management Office (Establishment, etc.) Act, 2003, as the legal basis for seeking legislative approval.
The provisions require external borrowing proposals to receive National Assembly approval.
Tinubu Identifies Eurobonds As Preferred Financing Option
Tinubu said the Federal Government would consider different financing channels, taking into account borrowing costs, benefits and the time required to access the funds.
However, he indicated that Eurobond issuance would receive greater attention because of its relatively faster processing time and ability to raise 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 options listed in the letter include concessional and commercial loans from multilateral and bilateral institutions.
The options also include facilities from the International Monetary Fund, bridge financing arrangements from book runners, loan syndications and direct borrowing from international financial institutions.
Tinubu acknowledged that the final interest rates, repayment periods and other conditions would depend on prevailing market conditions when the financing arrangements are concluded.
He said the Ministry of Finance and the Debt Management Office would work together to secure favourable terms for Nigeria.
“The final terms and conditions, interest rate and tenors can only be determined at the time of pricing. They will all be subject to market conditions prevailing at the time,” he said.
Defence, Agriculture, Power Among Priority Sectors
The President said the proposed external borrowing would support projects and programmes captured in the 2026 Appropriation Act.
He listed defence and security, transportation, agriculture, power, education and healthcare as priority sectors expected to benefit from the funds.
Tinubu argued that the additional financing would support budget implementation and consolidate the macroeconomic reforms pursued by his administration.
He also said the foreign currency proceeds would contribute to Nigeria’s external reserves.
According to the President, the funds would be received by the Central Bank of Nigeria on behalf of the Federal Government, increasing the country’s foreign reserves.
He said the anticipated increase would provide additional support for the naira and strengthen Nigeria’s external position.
Akpabio Urges Government To Negotiate Favourable Terms
Reacting to the request, Akpabio stressed the importance of securing favourable borrowing conditions.
He urged the Federal Government to examine the economic implications of proposed loan agreements and avoid arrangements that could impose excessive repayment obligations on the country.
“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,” Akpabio said.
The Senate President subsequently referred the request to the Committee on Local and Foreign Debts for further examination.
The committee is expected to review the proposed financing channels, borrowing arrangements and conditions before submitting its recommendations to the Senate.
The latest request comes amid continued concerns over Nigeria’s public debt, debt-servicing obligations and reliance on borrowing to finance annual budget deficits.
While the Federal Government maintains that borrowing helps address revenue shortfalls and fund critical development projects, questions remain about debt sustainability and whether the projects financed will generate sufficient economic returns.
