Senate Approves President Tinubu’s ₦1.77 Trillion Loan Request for 2024 Budget
The Senate has approved President Bola Tinubu’s request for an external loan of ₦1.77 trillion ($2.2 billion) to help finance part of the country’s 2024 fiscal year budget.
The loan was approved following a voice vote led by the Deputy Senate President, Barau Jibrin, after the Senate Committee on Local and Foreign Debts, chaired by Senator Wammako Magatarkada, presented their report.
The loan is intended to partially cover the N9.7 trillion budget deficit for 2024, as outlined in the President’s submission to the National Assembly.
The loan request comes amid concerns over Nigeria’s rising debt servicing costs as the Central Bank of Nigeria (CBN) recently reported that the federal government spent $3.58 billion on servicing foreign debt in the first nine months of 2024, marking a 39.77% increase from the $2.56 billion spent during the same period in 2023. This sharp rise in debt servicing expenses highlights the growing financial burden on the country, exacerbated by fluctuations in exchange rates.
The breakdown of debt servicing costs over the months reveals significant volatility. For instance, in January 2024, debt servicing costs surged by 398.89%, jumping from $112.35 million in January 2023 to $560.52 million. In contrast, February saw a slight decline in payments, followed by fluctuations throughout the year, with the highest payment occurring in May, when the government spent $854.37 million, a dramatic 286.52% increase from the previous year.
This rising debt burden underscores the ongoing challenges faced by Nigeria in managing its fiscal obligations. While the external borrowing is intended to help cover the budget deficit, the growing pressure from foreign debt servicing costs raises concerns about the country’s long-term economic sustainability, particularly in light of the persistent depreciation of the naira and increasing foreign exchange rates.
