Tag: External Borrowing

  • Tinubu To Present 2027 Budget To National Assembly Before Year-End

    Tinubu To Present 2027 Budget To National Assembly Before Year-End

    Precious Nwonu, Enugu

    President Bola Tinubu is expected to present the 2027 Appropriation Bill to the National Assembly before the end of December 2026, the Minister of State for Budget and Economic Planning, Doris Uzoka-Anite, has disclosed.

    Uzoka-Anite made this known on Wednesday while briefing State House correspondents on decisions taken at the Federal Executive Council (FEC) meeting presided over by Tinubu at the State House.

    She also announced that the council approved the National Development Plan for 2026–2030, alongside new policy measures aimed at reducing child stunting and improving food security.

    Among the approvals was the Revised National Policy on Food and Nutrition 2026, which is expected to replace existing frameworks and promote sustainable funding for nutrition programmes.

    According to the minister, the policy will strengthen cooperation among key sectors, including agriculture, livestock, health and education, as well as development partners.

    The announcements followed the 32nd Nigerian Economic Summit, held in Abuja from October 26 to 28.

    Meanwhile, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has defended the Federal Government’s proposed $21.7bn external borrowing plan, describing it as a long-term investment in infrastructure and other productive assets rather than funds intended for immediate expenditure.

    Oyedele explained that the proposal covers a period of about five years and does not mean the entire amount would be borrowed or disbursed at once.

    He said $10.6bn had been earmarked for major transportation projects, including the Sokoto–Badagry Highway, Lagos–Calabar Coastal Highway and Kano–Kaduna Metro Rail.

    The finance minister added that more than $7.9bn would come from multilateral and bilateral development partners, including a proposed $5bn facility from the World Bank, at an average interest rate of about 2.1 per cent.

    The borrowing plan also includes $3.3bn for projects by state governments and $1.45bn for the Federal Capital Territory.

    The proposed financing has been presented to the National Assembly for consideration.

  • FG Defends $21.7bn Loan Plan, Says Funds Will Drive Infrastructure Development

    FG Defends $21.7bn Loan Plan, Says Funds Will Drive Infrastructure Development

    Precious Nwonu, Enugu

    The Federal Government has defended its proposed $21.7bn supplementary external financing plan, arguing that the funds are intended to support long-term infrastructure and economic development rather than simply increase the country’s debt burden.

    The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the explanation on Wednesday while briefing State House correspondents after the Federal Executive Council meeting presided over by President Bola Tinubu in Abuja.

    Oyedele said the proposed financing covered 46 projects across 11 sectors, with an average project lifespan of five years. He stressed that the plan represented a framework for financing development projects and did not necessarily mean the government would borrow the entire amount.

    According to the minister, about $10.6bn of the proposed financing would be directed towards transportation infrastructure, including sections of the Lagos-Calabar and Sokoto-Badagry highways and the Kano-Kaduna Metro Rail project.

    He said the projects were expected to improve connectivity, reduce the cost of transporting goods and support regional trade. Ten major projects account for about $12.5bn, representing 58 per cent of the proposed financing.

    The plan also covers power, agriculture, healthcare, education, social protection and climate-related initiatives. Oyedele said projects in social sectors, agriculture, energy, social protection, climate and education, valued at about $4bn, would be financed entirely through concessional funding.

    The minister disclosed that approximately $7.9bn would come from multilateral and bilateral development partners, with the World Bank accounting for $5bn at an average interest rate of 2.1 per cent.

    He put the indicative average interest rate for the commercial component at 7.8 per cent, below the 9.1 to 9.6 per cent yield on Nigeria’s November 2025 Eurobond. He attributed the difference partly to credit rating upgrades by Fitch, Moody’s and Standard & Poor’s.

    Oyedele also clarified that about $4.8bn of the proposed financing was intended for state governments and government agencies, rather than the Federal Government alone. Of that amount, $3.3bn would go directly to states, while approximately $1.45bn would be channelled through agencies and development finance institutions.

    He cited the Bank of Industry, Development Bank of Nigeria, Transmission Company of Nigeria and electricity distribution companies among the institutions expected to benefit from the financing arrangements.

    The minister argued that external financing could be justified where the resulting economic value exceeded the cost of borrowing, adding that major infrastructure projects often required funding beyond what could be accumulated through savings alone.

    FEC Approves Power, Rail And Customs Projects

    Oyedele said the Federal Executive Council approved 10 memoranda at Wednesday’s meeting, including financing arrangements for electricity infrastructure, rail transport, road development and customs operations.

    One approval involved a €155.9m credit facility from Deutsche Bank and other lenders to upgrade five 132/33kV substations under the first phase of the Presidential Power Initiative.

    He said the intervention was expected to improve electricity supply to households and businesses while helping to reduce energy costs.

    The council also approved a $970m syndicated term loan from Standard Chartered and the Africa Finance Corporation to provide rolling stock for the Karu-Maradi rail line. The government expects the project to support freight movement, regional commerce and the Northern Economic Corridor.

    Another approval was a €76.8m credit facility from the ECOWAS Bank for Investment and Development for Bauchi State’s Transport Infrastructure Development Programme. The project will cover rural and urban roads, including routes linking farms to markets.

    The council also approved investment in non-intrusive inspection scanners and technical support for the Nigeria Customs Service. The equipment is expected to speed up cargo clearance, improve the detection of misdeclared goods and strengthen efforts to intercept contraband and illegal weapons.

    Government Highlights Economic Indicators

    During the briefing, Oyedele defended the Tinubu administration’s economic reforms, comparing current indicators with conditions when the government took office in May 2023.

    He said inflation stood at 22.41 per cent at the time, while net foreign reserves were below $1bn. He also claimed that the previous administration had printed more than ₦30tn to finance spending, arguing that the resulting monetary pressures continued to affect prices.

    The minister said the government’s debt-service-to-revenue ratio had fallen from 97 per cent in 2023 to below 60 per cent, while economic growth increased from 2.74 per cent in May 2023 to 4.43 per cent in the second quarter of 2026.

    He also reported that inflation fell to 14.63 per cent in September 2026, compared with 20.98 per cent a year earlier. The figures were presented as evidence of improving macroeconomic conditions, although the minister acknowledged that many Nigerians continued to face economic hardship.

    Oyedele said foreign reserves had risen to more than $55bn, with net reserves exceeding $45bn, compared with less than $1bn three years earlier. He added that Nigeria’s tax-to-GDP ratio had increased from about seven per cent in 2023 to approximately 12.5 per cent at the end of 2025.

    The minister attributed the changes to the administration’s reforms, including the removal of petrol subsidies and adjustments to foreign exchange policy.

    He said the government had also introduced measures to cushion the effects of economic reforms, including student loans, cash transfers to vulnerable households and subsidised credit for small businesses.

    According to him, the Nigerian Education Loan Fund had disbursed ₦372.6bn to more than 1.5 million students, while over 10 million households had received cash transfers worth more than ₦600bn.

    He added that more than 800,000 micro, small and medium-sized enterprises had benefited from subsidised loans and that tax exemptions had been introduced for eligible low-income earners and small businesses.

     FG Targets Lower Food Prices

    Oyedele said the Federal Executive Council had adopted a priority resolution to stabilise food prices and work towards single-digit inflation by the end of 2027 or earlier.

    He explained that the government was coordinating with state governments under a 90-day action plan developed through the National Economic Council to address food supply and affordability.

    In the short term, the government intends to stabilise or reduce prices of major staples, including rice, yam, beans and maize, before the end of the year.

    Oyedele said authorities would assess the gap between domestic food production and consumption to determine whether targeted imports were necessary. He added that any rice imports under the plan would be limited to unprocessed brown rice to protect local milling and processing jobs.

    Over the longer term, the government plans to expand irrigation farming, improve crop yields through scientific methods and reduce post-harvest losses.

    The minister said the administration intended to increase domestic food production, make prices more affordable and expand exports of processed agricultural products.

    The borrowing proposal has attracted criticism from opposition figures, including African Democratic Congress presidential candidate Atiku Abubakar, who has urged the National Assembly to suspend consideration of the request until the government publishes details of the projects to be financed.

    The proposal remains subject to legislative scrutiny and approval by the National Assembly.

  • FG Disputes World Bank’s N7.7tn Interest Payments Figure

    FG Disputes World Bank’s N7.7tn Interest Payments Figure

    Precious Nwonu, Enugu

    The Federal Government has challenged the World Bank’s assessment of Nigeria’s debt burden, arguing that reports suggesting interest payments exceeded government revenue in the first half of 2026 were based on an incomplete fiscal picture.

    The Federal Ministry of Finance said the reported N7.7tn interest payments, equivalent to about 124 per cent of the N6.2tn revenue recorded during the period, did not accurately reflect the government’s debt position.

    The ministry stated its position in a statement issued on Sunday and shared on X by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.

    The response followed public discussions surrounding the World Bank’s October 2026 Nigeria Development Update, which reported Federal Government revenue of N6.2tn and interest payments of N7.7tn between January and June 2026.

    An analysis of the published figures showed that interest payments exceeded revenue by N1.5tn, representing approximately 124.2 per cent of revenue. The ratio was calculated from the figures in the report rather than expressly stated by the World Bank.

    However, the ministry argued that the calculation was misleading for three reasons, including the inclusion of debt obligations serviced on behalf of state governments, incomplete revenue figures and the timing of revenue collections.

    According to the ministry, the interest-payment figure included external loans serviced by the Federal Government on behalf of other tiers of government.

    It maintained that comparing such obligations exclusively with federal revenue inflated the ratio because debt and revenue figures should cover the same level of government.

    The ministry also argued that the revenue figure excluded income generated by government agencies and enterprises but not yet remitted to the Treasury.

    It added that statutory payment schedules meant some taxes were collected predominantly in the second half of the year, making the first six months an incomplete basis for evaluating annual debt obligations.

    To support its position, the ministry compared the figures for the first half of 2025 with those for the corresponding period in 2026.

    It said Federal Government revenue increased by 72 per cent, from N3.6tn to N6.2tn, while interest payments rose by 38 per cent, from N5.6tn to N7.7tn.

    The ministry said the interest-to-revenue ratio consequently declined from 156 per cent in the first half of 2025 to approximately 124 per cent in the first half of 2026.

    It also stated that the full-year debt-service-to-revenue ratio had fallen below 60 per cent, compared with 97 per cent before the current administration’s reforms.

    The ministry described the figures as evidence of improved fiscal management, arguing that the gap between interest payments and revenue had narrowed from N2tn to N1.5tn.

    “This is the result of reforms working, not a sign of fiscal distress,” the ministry stated.

    It further rejected the use of a six-month fiscal snapshot as a definitive measure of debt sustainability, pointing instead to the World Bank’s full-year projection.

    “The same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 per cent of revenue. This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the statement read.

    The ministry also defended the administration’s borrowing programme, insisting that all loans obtained by the government were lawful and had received the necessary approvals.

    It said borrowing complied with the limits authorised by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

    The ministry added that the government’s borrowing activities were guided by the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, while details of public debt were regularly published by the Debt Management Office.

    However, the ministry did not provide revised revenue and interest-payment figures or an alternative ratio to support its challenge to the World Bank’s assessment.

     FG to Begin Repaying $1.25bn World Bank Loan in 2031

    Meanwhile, the Federal Government is scheduled to begin repaying the principal on a $1.25bn World Bank loan in December 2031, with the final instalment on one of the facilities due in June 2060.

    The financing, obtained under the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing programme, is designed to support reforms targeting access to credit, electricity supply, trade competitiveness and government revenue.

    The facility comprises a $750m concessional credit from the International Development Association and a $500m loan from the International Bank for Reconstruction and Development, both members of the World Bank Group.

    The loan was approved in 2026 amid concerns about Nigeria’s rising debt burden and calls for the government to limit external borrowing.

    The World Bank said the financing would support Nigeria’s transition towards more inclusive economic growth, improve competitiveness and create jobs.

    The reforms cover capital markets, digital services, electricity access, trade barriers, agricultural inputs and domestic revenue mobilisation.

    According to the financing agreements reviewed by *The PUNCH*, principal repayments on both facilities will begin on December 15, 2031, although their repayment periods differ.

    The $750m IDA credit is scheduled to be fully repaid by June 15, 2051, while the $500m IBRD loan will run until June 15, 2060.

    Under the IDA agreement, Nigeria will repay 2.5 per cent of the credit every six months, amounting to $18.75m per instalment, or $37.5m annually during full repayment years.

    For the IBRD facility, the government will make semi-annual principal payments of 1.72 per cent from December 2031 through December 2059, followed by a final instalment of 1.96 per cent in June 2060.

    The regular IBRD instalments amount to approximately $8.6m every six months, while the final payment is about $9.8m.

    Combined, the two facilities will require principal repayments of approximately $27.35m every six months between December 2031 and June 2051, equivalent to about $54.7m annually during full repayment years.

    The repayment schedules will extend across several administrations, with the final principal payment on the IBRD facility due nearly 34 years after the agreements were signed.

    The figures cover principal repayments only and exclude interest and other applicable charges.

    Under the IBRD agreement, the interest rate is based on a reference rate plus a variable spread. The IDA credit’s interest charge is calculated using the reference rate and variable spread, less 250 basis points, subject to applicable conditions.

    The IBRD loan also carries a front-end fee of 0.25 per cent, equivalent to $1.25m, and an annual commitment charge of 0.25 per cent on the undisbursed balance.

    The IDA agreement provides for a maximum annual commitment charge of 0.5 per cent on the undisbursed financing balance.

    The agreements do not specify a fixed dollar amount for total interest payments over the repayment period, meaning the eventual borrowing cost will depend on applicable rates and other contractual provisions.

    The IDA credit is structured for disbursement in a single tranche, subject to the World Bank’s assessment of Nigeria’s economic policies and implementation of agreed reforms.

    The IBRD facility is divided into two withdrawal tranches of $249.375m each, with the remaining $1.25m allocated to the front-end fee.

    Release of the second tranche depends on satisfactory progress in implementing the programme, maintaining an adequate macroeconomic framework and completing agreed policy actions.

    The IBRD agreement also allows the lender to cancel part or all of the undisbursed balance if the government fails to take satisfactory corrective measures within 90 days of receiving notice.

    Both agreements have a closing date of December 31, 2027.

    Loan Tied to Tax, Electricity and Trade Reforms

    The financing agreements outline two broad reform areas: improving access to credit, digital services and electricity, and strengthening economic competitiveness through trade, taxation and agricultural measures.

    Among the recognised measures are the Investment and Securities Act 2025, the National Integrated Electricity Policy, electricity metering reforms and regulations designed to encourage private investment in interconnected mini-grids.

    The government also committed to implementing trade reforms under the African Continental Free Trade Area, including the gradual liberalisation of 90 per cent of tariffs on goods from African countries over 10 years.

    Other measures include removing import bans on specified essential food products and inputs, reducing import adjustment taxes on selected commodities by at least 25 per cent in 2026, and progressively eliminating applicable adjustment taxes between 2027 and 2036.

    In taxation, the agreements recognise the introduction of mandatory electronic invoicing for Value Added Tax, a 15 per cent minimum effective tax rate for large companies and multinational enterprises, and an increase in the maximum personal income tax rate from 24 to 25 per cent.

    The financing arrangements also impose reporting and accountability requirements on Nigeria.

    The government is required to maintain dedicated dollar accounts for receiving loan proceeds and ensure that equivalent amounts are reflected in its budget management system.

    The Federal Ministry of Finance must report amounts received, relevant account details and transaction records to the World Bank within 30 days of each withdrawal.

    The agreements further require the accounts to be audited by auditors of the Central Bank of Nigeria acceptable to the World Bank. Certified audit reports must be submitted within four months of withdrawal and made publicly available.

    The World Bank’s financing is intended to support Nigeria’s economic reform programme, with disbursement subject to satisfactory implementation of the agreed measures and maintenance of an adequate macroeconomic policy framework.