On Wednesday, May 28, President Bola Tinubu formally requested the National Assembly’s approval for additional loans totaling N34.15 trillion, a move that would push Nigeria’s total public debt beyond N180 trillion.
The request includes a new external borrowing plan of $21.5 billion, equivalent to N33.39 trillion at the current exchange rate of N1,590 per dollar, and a domestic bond issuance of N757.9 billion to settle longstanding pension liabilities.
In separate letters addressed to both chambers of the National Assembly—read during plenary by Senate President Godswill Akpabio and Speaker of the House Tajudeen Abbas—Tinubu emphasized the strategic importance of the 2025–2026 borrowing plan, asserting that the proposed funds would be directed toward priority sectors of the economy.
“The 2025–2026 borrowing plan covers all sectors, with specific emphasis on infrastructure, agriculture, health, education, water supply, growth, security, and employment generation, as well as financial and monetary reforms, among others,” Tinubu stated.
According to the documents submitted, the proposed borrowing includes:
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USD 21.54 billion
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EUR 2.19 billion
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15 billion Japanese Yen
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A grant component of 65 million EUR
Tinubu described the loan as essential in the face of rising fiscal challenges exacerbated by the removal of fuel subsidies, which has compounded financial strain across sectors.
“In light of the significant infrastructure deficit in the country and paucity of financial resources needed to address this gap, amid declining domestic demand, it has become essential to pursue prudent economic borrowing to close the financial shortfall,” he said.
The President assured that the funds would be invested in critical infrastructure projects, particularly in rail, healthcare, and nationwide development across all 36 states and the Federal Capital Territory.
“This initiative aims to generate employment, promote skill acquisition, foster entrepreneurship, reduce poverty, and enhance food security, as well as improve the livelihoods of Nigerians,” he added.
Pension bond to ease retirees’ hardship
In a separate letter, Tinubu sought legislative backing for the issuance of N757.9 billion in Federal Government bonds to clear accrued pension arrears under the Contributory Pension Scheme (CPS). Citing the Pension Reform Act 2014, he acknowledged the government’s inability to fulfill its pension obligations due to persistent revenue shortfalls, which has resulted in mounting arrears and financial hardship for retirees.
“The Senate, House of Representatives are invited to note that the Federal Government has not been compliant with the implementation of the above provisions of the PRA 2014 over the years due to revenue challenges leading to the accumulation of pension arrears with the attendant suffering of retirees,” he said.
The proposal to issue pension bonds, he noted, received Federal Executive Council (FEC) approval on Tuesday, February 4.
“It will enable the Federal Government of Nigeria to meet obligations under the CPS and restore confidence in the pension industry,” the letter added. “It will also ensure positive welfare, even for the retirees, as this will enable them to meet their basic needs, improve health and avoid untimely death.”
Mounting debt, worsening fiscal pressure
The borrowing request comes amid mounting public concern over Nigeria’s spiraling debt. As of the end of 2024, the nation’s total public debt stood at N144.66 trillion, representing a 48.6% increase from N97.34 trillion in 2023, with the Federal Government accounting for N137.28 trillion (95%).
Between January and April 2025, Nigeria borrowed an additional N10.85 trillion from domestic sources. With the new loan request, the total debt load is now expected to surpass N180 trillion.
Debt servicing costs outpace revenue
Even more troubling is the country’s deteriorating debt service-to-revenue ratio, which reached 131% in the first two months of 2025, up from 118% in the same period of 2024, based on data from the Central Bank of Nigeria. The government spent N1.399 trillion servicing debt in January–February 2025, compared to N1.117 trillion the previous year.
Revenues rose only modestly by 13% year-over-year, from N943.4 billion to N1.067 trillion, underscoring the fiscal imbalance. Analysts have warned that debt service costs will continue to climb, especially with the fresh borrowing.
Experts weigh in: caution and reform needed
Tunde Abidoye, Head of Equity Research at FBNQuest Merchant Bank, voiced concern over the scale of borrowing:
“The magnitude of the new loan is too large, representing almost half of the total external debt of $45.8 billion as at December 2024. I believe some caution is warranted, given the potential rise in debt service cost and the inherent exchange rate risks associated with foreign-denominated borrowings.”
Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers, noted that while borrowing can be justified to fund deficits, repayment capacity must not be overlooked:
“This is not the first pension bond that will be issued, and I figure it won’t be the last. Borrowing in itself is not a problem as long as the capacity to meet up with repayment obligations is there. It is, however, important that we pay particular attention to application and usage of the loans.”
Clifford Egbomeade, an economic analyst, added that while the borrowing could provide short-term relief and stimulate economic activity, it needs to be tied to reforms and productivity:
“If the external loans are concessional and targeted at productive sectors like agriculture, job creation, and infrastructure, they could contribute to broader economic development. However, success will depend on how efficiently the funds are used and whether they’re tied to reforms that boost revenue and reduce waste.”
Next steps
The Senate has referred the request to the Committee on Local Debts, while the House has directed the matter to the Committees on National Planning and Economic Development and Pensions for further scrutiny. Reports are expected to be submitted for further legislative consideration.
