FG Clarifies External Borrowing Plan
…Confirms $1.23bn for 2025 Budget Undrawn
By Patience Ikpeme
The federal government on Wednesday clarified its external borrowing strategy, stating that the $1.23 billion external borrowing component for the 2025 budget remains undrawn and is planned for the second half of 2025.
This explanation from the Federal Ministry of Finance follows President Bola Ahmed Tinubu’s formal request on May 27, 2025, for the National Assembly’s approval of the 2024–2026 External Borrowing Rolling Plan.
The ministry stated that the borrowing plan itself does not equate to immediate borrowing for the period, noting that “The actual borrowing for each year is contained in the annual budget.” It added that the comprehensive plan encompasses both federal and several state governments across numerous geopolitical zones, including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States.
The Ministry of Finance also conveyed that the Borrowing Rolling Plan does not automatically lead to an increase in the nation’s debt burden. The nature of this rolling plan means that borrowings are phased over the duration of the projects.
For example, a significant portion of projects within the 2024–2026 rolling plan feature multi-year drawdowns, typically spanning five to seven years, and are specifically tied to projects. These initiatives cover critical sectors of the economy, such as power grids and transmission lines, irrigation for improved food security, fiber optics networks nationwide, fighter jets for security, and essential rail and road infrastructure.
The majority of the proposed borrowing will be sourced from Nigeria’s development partners, including the World Bank, African Development Bank, French Development Agency, European Investment Bank, JICA, China EximBank, and the Islamic Development Bank. These institutions are known to offer concessional financing, characterized by favorable terms and extended repayment periods, thereby supporting Nigeria’s development objectives in a sustainable manner.
The proposed Borrowing Rolling Plan is described as an essential component of the Medium-Term Expenditure Framework (MTEF), aligning with both the Fiscal Responsibility Act 2007 and the DMO Act 2003. This plan outlines the external borrowing framework for both the federal and sub-national governments over a three-year period, complete with five detailed appendices covering project specifics, terms and conditions, and implementation timelines. By adopting such a structured, forward-looking approach, the plan aims to facilitate comprehensive financial planning and avoid the inefficiencies often associated with ad hoc or reactive borrowing practices, thereby enhancing Nigeria’s ability to implement effective fiscal policies and mobilize development resources.
The government also conveyed that the debt service to revenue ratio has begun to decrease from its peak of over 90 percent in 2023. It noted that the government has discontinued the distortionary and inflationary ways and means. There are significant revenue expectations from the Nigerian National Petroleum Corporation (NNPC), along with technology-enabled monitoring and collection of surpluses from Government Owned Enterprises and revenue-generating ministries, departments, and agencies, including legacy outstanding dues.
Having achieved a fair degree of macroeconomic stabilization, the Federal Government’s overarching goal is to guide the economy onto a path of rapid, sustained, and inclusive economic growth. Achieving this vision, according to the ministry, requires substantial investment in critical sectors such as transportation, energy, infrastructure, and agriculture.
These investments, the ministry stated, “will lay the groundwork for long-term economic diversification and encourage private sector participation. Our debt strategy is therefore guided not solely by the size of our obligations, but by the utility, sustainability, and economic returns of the borrowing. Ensuring that all borrowed funds are efficiently utilized and directed toward growth-enhancing projects remains a top priority.”
In conclusion, the government maintains its commitment to keeping borrowing within manageable and sustainable limits, in accordance with the DMO Debt Sustainability Framework.
The ongoing tax reform agenda and other revenue initiatives are expected to further improve revenue generation and foster prudent financial management. The government also conveyed its dedication to fiscal discipline, transparency, and accountability, recognizing constructive public engagement and legislative oversight as vital components for achieving long-term economic stability and inclusive national prosperity.
