Reps approves Tinubu’s plan to borrow $2.35bn, issue $500m Sovereign Sukuk

The House of Representatives has approved President Bola Tinubu’s request to borrow $2.35 billion to finance part of the 2025 budget deficit.

During Wednesday’s plenary, the green chamber also granted the President approval to issue a $500 million debut sovereign sukuk in the international capital market to fund infrastructure projects and diversify Nigeria’s financing sources.

The approval followed the consideration of a report submitted by the Committee on Aids, Loans, and Debt Management.

According to the report, lawmakers endorsed the implementation of a new external borrowing of N1,843,669,786,987.16,  equivalent to $1.23 billion, at the budget exchange rate of N1,500 per dollar, to partially finance the N9.27 trillion deficit in the 2025 Appropriation Act.

Earlier this month, President Tinubu sought the National Assembly’s approval, citing sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003, which mandate legislative consent for new borrowing and refinancing arrangements.

He explained that the funds would be sourced through a combination of instruments, including eurobonds, loan syndications, or bridge financing facilities, depending on prevailing market conditions.

Tinubu also noted that the pricing of the eurobonds would align with current yields on Nigeria’s existing international bonds, which range between 6.8 and 9.3 percent, depending on maturity.

On the $500 million sovereign sukuk, the President said the initiative aims to expand Nigeria’s investor base and strengthen the government’s securities market while supporting the development of critical infrastructure projects.

Tinubu added that between 2017 and 2025, the federal government successfully raised over N1.39 trillion through domestic sukuk issuances to finance major roads and infrastructure projects.

The external sukuk, he said, would complement those efforts.

“It is imperative to open new sources of funding for the federal government and deepen the FGN securities market.

The proposal is for the House of Representatives to approve the issuance of a stand-alone debut Sovereign Sukuk with or without credit enhancement (Guarantee) from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank Group,” Tinubu stated in his letter to lawmakers.

He also disclosed that 25 percent of the sukuk proceeds would be used to repay high-cost debts, while the remaining funds would be channelled toward key infrastructure development across the country.

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