The Nigerian Senate has approved President Bola Tinubu’s request to secure a ₦1.77 trillion ($2.2 billion) external loan to partially finance the ₦9.7 trillion budget deficit for the 2024 fiscal year. The approval was granted following a voice vote presided over by Deputy Senate President Barau Jibrin.
Breakdown of the Loan Request
The loan request, submitted on Tuesday, was reviewed and endorsed by the Senate Committee on Local and Foreign Debts, chaired by Senator Wammako Magatarkada. This borrowing plan is part of the 2024 Appropriation Act and comes amid rising concerns over Nigeria’s escalating debt servicing costs.
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Rising Debt Servicing Costs
According to the Central Bank of Nigeria (CBN), Nigeria spent $3.58 billion on foreign debt servicing during the first nine months of 2024, marking a 39.77% increase compared to $2.56 billion in the same period of 2023.
- May 2024 saw the highest monthly debt servicing payment, amounting to $854.37 million—a 286.52% increase from May 2023.
- January 2024 recorded a 398.89% surge in payments, rising to $560.52 million from $112.35 million in January 2023.
- In contrast, June 2024 and July 2024 saw slight reductions of 6.51% and 15.48%, respectively, compared to the same months in 2023.
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Concerns Over Nigeria’s Debt
The approval of this loan further stretches Nigeria’s financial obligations, with debt servicing costs already consuming a significant portion of the country’s revenues. Analysts and policymakers continue to express concerns over the rising exchange rates and the growing pressure of foreign debt obligations on the nation’s economy.
