FG Unpacks 2024-2026 External Borrowing Plan: A Strategic Path to Economic Growth, Not Just More Debt

Abuja, Nigeria – The Federal Ministry of Finance has moved to clarify Nigeria’s 2024-2026 External Borrowing Rolling Plan, emphasizing it’s a strategic framework for sustainable development rather than an immediate accumulation of new debt. This comes after President Bola Ahmed Tinubu, GCFR, formally sought the National Assembly’s approval for the plan on May 27, 2025, a move that sparked public discourse.

The Ministry, in a press statement signed by Director of Information and Public Relations, Mohammed Manga, FCAI, explained that the proposed borrowing plan is an integral part of the Medium-Term Expenditure Framework (MTEF), aligning with both the Fiscal Responsibility Act 2007 and the Debt Management Office (DMO) Act 2003. This structured, forward-looking approach aims to streamline financial planning and move away from reactive borrowing, enhancing Nigeria’s capacity to implement effective fiscal policies and mobilize crucial development resources.

What the Plan Entails:

The plan outlines the external borrowing framework for both the federal and sub-national governments (including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States) over a three-year period. It includes detailed appendices on specific projects, terms and conditions, and implementation timelines.Crucially, the Ministry stressed that the borrowing plan does not equate to actual borrowing for the entire period. The actual borrowing for each year is factored into the annual budget. For 2025, the external borrowing component is US $1.23 billion, which has not yet been drawn and is scheduled for the second half of the year.

Project-Tied, Long-Term Investments:

A significant point highlighted by the Ministry is that the nature of this rolling plan means borrowings are spread across the duration of projects. A large proportion of the projects within the 2024-2026 plan feature multi-year drawdowns, typically between 5 to 7 years, as they are project-tied loans. These investments are directed towards vital sectors of the economy, including:

* Power: Enhancing grids and transmission lines.

* Food Security: Developing irrigation systems.

* Technology: Expanding fibre optics networks across the country.

* Security: Acquiring fighter jets.

* Infrastructure: Developing rail and road networks.

Concessional Financing from Development Partners:

The majority of the proposed borrowing will be sourced from Nigeria’s established development partners.

These include:

* The World Bank

* African Development Bank

* French Development Agency

* European Investment Bank

* JICA (Japan International Cooperation Agency)

* China EximBank

* Islamic Development Bank

These institutions offer concessional financing, characterized by favorable terms and long repayment periods, which are essential for supporting Nigeria’s sustainable development objectives.

Improving Debt Sustainability and Revenue Generation:

The government also provided an update on its debt management strategy. The debt service to revenue ratio, which peaked at over 90% in 2023, has reportedly started to decrease. This improvement is attributed to the government’s decision to discontinue the “distortionary and inflationary” Ways and Means advances from the Central Bank of Nigeria.

Furthermore, the Ministry anticipates significant revenue generation from the Nigerian National Petroleum Corporation (NNPC) and through technology-enabled monitoring and collection of surpluses from Government Owned Enterprises (GOEs) and revenue-generating Ministries, Departments, and Agencies (MDAs), including the recovery of legacy outstanding dues.

A Pivot Towards Sustainable Growth:

With a fair degree of macroeconomic stabilization now achieved, the Federal Government’s overarching goal is to propel the economy towards rapid, sustained, and inclusive economic growth. This vision necessitates substantial investments in critical sectors like transportation, energy, infrastructure, and agriculture, which are seen as foundational for long-term economic diversification and attracting private sector participation.

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The government reiterates that its debt strategy is not solely driven by the size of its obligations but by the utility, sustainability, and economic returns of the borrowing. A top priority remains ensuring that all borrowed funds are efficiently utilized and directed towards growth-enhancing projects.

In closing, the Ministry reaffirmed its commitment to maintaining borrowing within manageable and sustainable limits, in accordance with the DMO Debt Sustainability Framework. Ongoing tax reforms and other revenue initiatives are expected to further bolster revenue generation and promote prudent financial management. The government also emphasized its dedication to fiscal discipline, transparency, and accountability, inviting constructive public engagement and legislative oversight as vital components of its journey towards long-term economic stability and inclusive national prosperity.