Senate Approves $21.5 Billion Loan to Fund Nigeria's 2025 Budget Amid Economic Challenges

In a significant move to address Nigeria's fiscal challenges, the Senate has approved President Bola Tinubu's request for a 21.5 billion external borrowing plan to fund the 2025 budget. The approval also includes a domestic bond issuance of ₦757 billion aimed at settling outstanding pension arrears under the Contributory Pension Scheme (CPS). 

The comprehensive borrowing package comprises21.19 billion in direct foreign loans, €4 billion, ¥15 billion, a 65 million grant, and an additional2 billion to be raised through foreign-currency-denominated instruments in the domestic market.  These funds are earmarked for critical sectors including infrastructure, healthcare, education, security, and housing.

A notable allocation within the plan is $3 billion dedicated to revamping the Eastern Rail Corridor, spanning from Port Harcourt to Maiduguri.  This project aims to enhance connectivity and stimulate economic activities in the eastern region.

The Senate's decision comes amid ongoing economic reforms initiated by President Tinubu since taking office in 2023, including the removal of fuel subsidies and currency devaluation. While these measures aim to stimulate growth, they have also led to inflation and increased living costs.

The approved borrowing plan is part of the 2025–2026 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), outlining Nigeria's fiscal direction for the coming years.  Senate leaders assert that the loans are concessional, with favorable terms to ensure sustainability.

As Nigeria navigates its economic challenges, the effective utilization of these funds will be crucial in achieving the intended developmental goals and ensuring long-term fiscal stability.