Tinubu Seeks Lawmakers’ Nod for $2.3bn External Loan, $500m International Sukuk Issue

Borrowing to Fund 2025 Budget and Refinance Debts

According to the letter, the proposed borrowing forms part of the government’s 2025 fiscal strategy, which anticipates $9.27 billion in new loans to address the projected budget deficit. Of this amount, $1.84 billion is earmarked for external financing at an assumed exchange rate of ₦1,500 per US dollar.

Tinubu stated that the funds would be used to implement the 2025 Appropriation Act, refinance maturing Eurobonds, and expand Nigeria’s debt instruments to include Islamic finance products.

“This external borrowing will be sourced through Eurobonds, syndicated loans, bridge financing, or direct loans from multilateral institutions to optimise cost and manage risk effectively,” the President noted.

A key priority under the plan is the refinancing of Nigeria’s $1.118 billion Eurobond, issued in 2018 at a coupon rate of 7.625%, which matures in November 2025.

“Refinancing through Eurobonds or syndicated loans is standard practice in debt capital markets and will guarantee debt sustainability and boost investor confidence,” Tinubu said.

Nigeria’s First International Sukuk Issue

The President’s correspondence also revealed plans to issue a $500 million sovereign Sukuk — Nigeria’s first international Islamic bond. The initiative builds on the success of domestic Sukuk issuances, which have raised over ₦1.39 trillion since 2017 to finance major infrastructure projects, particularly in road construction.

Tinubu explained that the international Sukuk aims to bridge the country’s infrastructure funding gap while diversifying its investor base and tapping into the rapidly growing global Islamic finance market.

“The government is exploring a credit enhancement guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IsDB) Group, to strengthen the offering,” he stated.

If the ICIEC guarantee is utilised, 25% of the proceeds will go towards repaying expensive debt obligations, while the remainder will finance pre-identified infrastructure projects, according to the President’s letter.

Ensuring Credible and Sustainable Borrowing

Tinubu assured lawmakers that the Federal Ministry of Finance and the Debt Management Office would collaborate with reputable transaction advisers to secure the most favourable pricing and terms, despite global market volatility.

“Nigeria has maintained its reputation as a consistent and credible issuer in international capital markets,” Tinubu said, expressing confidence that the new transactions would reinforce fiscal discipline and investor trust.

The administration views these measures as essential to sustaining fiscal stability, refinancing obligations responsibly, and expanding access to non-traditional funding channels such as Islamic finance.

Analysts’ Take and Fiscal Implications

Analysts note that Nigeria’s increasing reliance on a blend of domestic and external borrowing represents a pragmatic response to rising inflation, foreign exchange volatility, and high global interest rates.

They also observe that the proposed international Sukuk could enhance Nigeria’s credit profile, lower borrowing costs, and reduce dependence on Eurobond markets, particularly if backed by ICIEC’s guarantee.

Allocating a portion of proceeds to retire expensive debt, experts argue, reflects a more strategic and sustainability-focused debt management approach.

As Africa’s largest economy, Nigeria continues to balance its infrastructure development goals with the imperative of maintaining debt sustainability amid global financial uncertainty.