BREAKING: SENATE APPROVES TINUBU'S N1.77TRN LOAN REQUEST

Read Time:2 Minute, 24 Second

Following a voice vote in favor of the request, the Senate approved President Bola Tinubu’s loan request for N1.77 trillion ($2.2b).

Following the presentation of the committee’s report by Senator Wammako Magatarkada (APC, Sokoto North), chair of the Senate Committee on Local and Foreign Debts, the Senate, presided over by Deputy Senate President Barau Jibrin, authorized the loan.

In order to partially finance the N9.7 trillion budget deficit for the fiscal year 2024, the President made the request on Tuesday as part of a new external borrowing strategy.

In a letter to the National Assembly on Tuesday, Tinubu requested their approval of a new foreign borrowing plan in the 2024 Appropriation Act that would amount to N1.767 trillion, or $2.209 billion.

It is anticipated that the new loan will extend the federal government’s debt servicing expenditures. The Federal Government spent $3.58 billion in the first nine months of 2024 servicing foreign debt, according to a recent report from the Central Bank of Nigeria.

The figure represents a 39.77 percent rise over the $2.56 billion spent during the same period in 2023, according to the CBN report on international payment statistics.

The study states that the largest monthly debt servicing payment in 2024 was $854.37 million in May, while the greatest monthly expense in 2023 was $641.70 million in July.

The CBN’s trend in servicing foreign debt demonstrates how expensive Nigeria’s debt commitments are becoming.

Further breakdown of international debt figures showed that in January 2024, debt servicing costs surged by 398.89 per cent, rising to $560.52m from $112.35m in January 2023. February, however, saw a slight decline of 1.84 per cent, with payments reducing from $288.54m in 2023 to $283.22m in 2024.

March recorded a 31.04 per cent drop in payments, falling to $276.17m from $400.47m in the same period last year. April saw a significant rise of 131.77 per cent, with $215.20m paid in 2024 compared to $92.85m in 2023.

The highest debt servicing payment occurred in May 2024, when $854.37m was spent, reflecting a 286.52 per cent increase compared to $221.05m in May 2023. June, on the other hand, saw a 6.51 per cent decline, with $50.82m paid in 2024, down from $54.36m in 2023.

July 2024 recorded a 15.48 per cent reduction, with payments dropping to $542.50m from $641.70m in July 2023. In August, there was another decline of 9.69 per cent, as $279.95m was paid compared to $309.96m in 2023. However, September 2024 saw a 17.49 per cent increase, with payments rising to $515.81m from $439.06m in the same month last year.

Given rising exchange rates, the data raises concerns about the growing pressure of Nigeria’s foreign debt obligations.