The Senate has begun scrutinising President Bola Tinubu’s request for approval to secure a $7.7bn (N10.79tn) external loan to part-finance the Federal Government’s 2026 budget deficit.

The request was presented in a letter dated 26 October 2026, addressed to Senate President Godswill Akpabio and read during Wednesday’s plenary.

Following its presentation, Mr Akpabio referred the proposal to the Senate Committee on Local and Foreign Debts for detailed consideration and directed it to report back as soon as practicable.

Loan forms part of N29.2tn borrowing plan

In the letter, President Tinubu explained that the proposed external borrowing represents the foreign financing component of the N29.2tn new borrowing provision in the 2026 Appropriation Act.

The borrowing plan comprises N18.4tn in domestic loans and N10.79tn in external financing, intended to help fund a projected budget deficit of about N31.4tn.

The President said the request was made in line with Sections 21(1) and 27(1) of the Debt Management Office (Establishment, etc.) Act, 2003, which require legislative approval for external borrowing arrangements.

Government favours Eurobond issuance

President Tinubu said the Federal Government would explore different financing options, including concessional and commercial loans from multilateral and bilateral institutions, facilities from the International Monetary Fund, bridge financing, loan syndications and direct borrowing from international financial institutions.

However, he indicated that greater emphasis would be placed on Eurobond issuance, which he said could be concluded faster and generate larger amounts at comparatively lower costs.

He added that the final interest rates, repayment periods and other loan conditions would depend on prevailing market conditions when the transactions are concluded.

The Ministry of Finance and the Debt Management Office, according to the President, would work to secure the most favourable terms for Nigeria.

Funds to support six priority sectors

The President said the proposed loan would finance critical projects and programmes captured in the 2026 Appropriation Act.

The identified priority sectors include defence and security, transportation, agriculture, power, education and healthcare.

He also argued that the foreign currency proceeds would strengthen Nigeria’s external reserves and provide additional support for the naira, as the funds would be received by the Central Bank of Nigeria on behalf of the Federal Government.

New request replaces earlier borrowing proposal

The latest request follows an earlier proposal in which President Tinubu sought legislative approval for external loans totalling $20.52bn and €1.045bn under the Federal Government’s 2026–2027 Supplementary External Borrowing Plan.

After reading the new letter, Mr Akpabio said it effectively superseded the previous request, noting that the latest proposal provided more details about the financing arrangements.

The Senate President also stressed the need for the government to negotiate favourable borrowing conditions and carefully consider the economic implications and repayment obligations before accepting any loan agreement.

The Senate committee is expected to examine the proposed financing channels and borrowing conditions before submitting its recommendations to the chamber.