Nigeria's Strategic $21.5 Billion Borrowing Plan for 2025-2026: A Detailed Look



As of May 28, 2025, President Bola Tinubu's administration has sought approval for a $21.5 billion loan, part of a two-year borrowing plan (2025-2026) integrated into Nigeria's Medium Term Expenditure Framework (MTEF). This framework, a critical fiscal planning tool, projects budget deficits and guides spending over a 3-5 year period, ensuring alignment with long-term economic goals rather than immediate, large-scale borrowing.
The loan is not an instant infusion but a strategic allocation to address projected deficits: approximately $9 billion in 2025 and the remainder in 2026. This approach aims to fund key infrastructure and human capital projects, crucial for sustainable development, while maintaining a deficit-to-GDP ratio below 4%, down from over 5% previously. This reduction is a result of recent economic reforms, including the removal of fuel and foreign exchange subsidies, which have freed up revenue and improved Nigeria's creditworthiness, as highlighted by a recent Fitch Ratings upgrade.
The borrowing plan is further supported by clearing over $7 billion in FX backlogs and securitizing previous debt, enhancing access to cheaper financing. Unlike past practices, this government avoids printing money via Ways & Means, a major inflation driver, opting instead for structured borrowing. The MTEF also accounts for increased revenue from ongoing reforms like tax restructuring and NNPC improvements, expected to boost the revenue-to-GDP ratio.
State governments, under this framework, can also borrow within set limits to fund their development projects, ensuring a coordinated national fiscal strategy. This borrowing is not merely to cover operational costs but to invest in long-term growth, aiming for a 7% annual GDP growth rate to alleviate poverty. The plan reflects a shift towards smarter, purpose-driven borrowing, leveraging improved economic stability and international confidence.

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