Fresh $2.2bn loan is what President Bola Tinubu is going for next, increasing a long list of bank facilities obtained so far by this administration.
President Bola Tinubu has requested approval from the National Assembly for a fresh $2.2 billion loan. The loan is part of a new external borrowing plan for the 2024 Appropriation Act. This comes just months after Nigeria’s government borrowed heavily to cover the country’s budget deficits. If approved, this loan will help finance the 2024 budget deficit of N9.7 trillion.
Tinubu’s request is not the first time his administration has turned to external borrowing. Since assuming office in May 2023, President Tinubu has sought loans to fill gaps in the federal budget. With the country facing major fiscal challenges, the government has leaned heavily on external loans to fund its spending plans.
The president has also sent the National Assembly the 2025-2027 Medium-Term Expenditure Framework and the Fiscal Strategy Paper for review and approval. These documents outline the government’s financial plans for the coming years. They may also set the stage for more borrowing in the future.
Fresh $2.2bn loan: Worries over debt levels
Nigerians have expressed mixed reactions to the president’s repeated requests for loans. Critics, including civil society groups, have raised concerns about the country’s rising debt profile. Many fear that this constant borrowing will worsen Nigeria’s debt burden, which is already one of the highest in Africa. The country’s debt servicing costs are consuming an ever-larger portion of government revenue. Many Nigerians are concerned that too many loans may worsen the hardship already brought on them by fuel price hikes.
One civil society group, Transparency Nigeria, has cautioned the government to be more transparent about the terms of these loans. They often argue that large scale borrowing could lead to a financial crisis in the future. Especially, if there is no clear plans for repayment. Social media users have also voiced their concerns. Many of them are asking how the government plans to repay these loans without further burdening Nigerians.
Borrowing for economic growth?
The request for a fresh $2.2 billion loan is just the latest in a series of borrowing moves made by the Tinubu administration. With a budget deficit of N9.7 trillion for 2024, it seems unlikely that this will be the last loan request. Experts predict that if Nigeria’s fiscal problems continue, the government will have to turn to even larger loans in the future.
In defense of its borrowing strategy, the Nigerian government argues that loans are essential to financing critical infrastructure projects and boosting economic growth. The administration claims that the funds will be used to address budget deficits and promote development in key sectors like infrastructure, healthcare, and education.
The government maintains that these loans are necessary to help Nigeria achieve its long-term development goals. President Tinubu has said that the loans will help improve Nigeria’s fiscal position and create jobs, reduce poverty, and stimulate economic growth.
Government officials are quick to emphasized that borrowing is a standard practice for many countries. The government asserts that it has a plan for managing the loans and that the country will be able to meet its debt obligations as long as the funds are properly used.
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