Lawmakers Approve Tinubu’s $2.35bn Loan Request To Bridge Budget Gap Amid Mounting Economic Pressures

 

Nigeria’s House of Representatives has given its nod to President Bola Tinubu’s fresh request to borrow $2.35 billion to fund part of the 2025 budget deficit. The approval followed the consideration and adoption of the report presented by the House Committee on Aids, Loans, and Debt Management, which examined the details of the proposed borrowing plan.

During the session held on Wednesday, lawmakers also endorsed the president’s proposal to issue a $500 million debt sovereign sukuk in the international capital market. The sukuk, a non-interest bond compliant with Islamic finance principles, is expected to be channelled into key infrastructure projects across the country while also diversifying Nigeria’s external funding sources.

Members of the lower legislative chamber argued that the borrowing request was necessitated by Nigeria’s current fiscal realities and the government’s commitment to sustaining public investment amid dwindling revenues. They maintained that without strategic financing, the federal government would face significant constraints in meeting its developmental obligations.

President Tinubu, in his communication to the National Assembly, explained that the borrowed funds would help fill gaps in the 2025 budget, which is facing a substantial deficit. The administration emphasized that the loans are part of a carefully designed fiscal strategy aimed at balancing the urgent need for development with a long-term plan for debt sustainability.

Despite the government’s assurances, concerns about the country’s ballooning debt profile have continued to dominate public discussions. Data from the Debt Management Office (DMO) revealed that Nigeria’s total public debt stood at ₦149.39 trillion as of the first quarter of 2025, marking a sharp increase from ₦121.7 trillion recorded in 2024. Analysts warn that the rising figures could limit fiscal flexibility and place a heavier burden on future budgets.

Some lawmakers voiced apprehension during deliberations, cautioning that the government must be prudent in its borrowing patterns. They stressed the importance of ensuring that loans are directed toward productive sectors capable of generating returns sufficient to repay the debts. Others insisted that while borrowing may be inevitable given the current fiscal environment, transparency and accountability must be the cornerstone of any loan utilization.

Speaker of the House, Tajudeen Abbas, had earlier raised the alarm in September 2025, declaring that Nigeria’s debt situation had reached what he described as a “dangerous threshold.” His comments reflected a growing unease among policymakers who fear that the continuous reliance on loans to finance budgets could threaten long-term economic stability.

The presidency, however, maintains that the administration is exercising restraint and adopting a responsible borrowing approach. Presidential advisers have repeatedly argued that the government’s debt-to-GDP ratio remains within manageable limits when compared to global standards. They insist that Tinubu’s economic team is focused on leveraging borrowed funds to stimulate growth, expand infrastructure, and strengthen revenue-generating capacities.

Economists have expressed mixed reactions to the latest development. Some believe that the loan, if efficiently managed, could provide the fiscal headroom needed to revitalize the economy and tackle infrastructural deficits that have long hindered industrial growth. Others caution that persistent dependence on external borrowing could expose the country to exchange rate volatility and repayment risks, particularly as global interest rates remain high.

Nigeria has over the past decade increasingly relied on external loans to finance public spending, driven by falling oil revenues and a sluggish tax collection system. Successive administrations have turned to both multilateral and bilateral lenders to bridge financing gaps, a trend that has drawn both support and criticism from different quarters.

Tinubu’s government insists that it is prioritizing economic reforms aimed at improving fiscal efficiency, reducing waste, and boosting non-oil revenues through improved taxation and investment incentives. Officials have also hinted that proceeds from the proposed sukuk issuance will be channelled into road construction, housing development, and power sector expansion, projects expected to generate employment and stimulate local production.

While the approval of the $2.35 billion loan marks a significant milestone for the administration’s fiscal plan, observers say the true test will lie in implementation and the measurable impact of the borrowed funds. The success or failure of this borrowing strategy, they argue, will shape public perception of the Tinubu government’s economic management and influence Nigeria’s credit standing in the years ahead.

For now, the green chamber’s decision reflects a balancing act between supporting the president’s fiscal agenda and responding to growing public anxiety about the nation’s rising debt load. The coming months will determine whether this latest borrowing move strengthens the country’s economic foundation or deepens its fiscal vulnerability.