Nigeria’s Debt Management Office (DMO) has provided clarity on the FG’s $2.35bn external borrowing plan, describing it as a dual-purpose strategy designed to both finance the 2025 budget and refinance existing Eurobond obligations without increasing the country’s default risk.
According to the DMO’s Director-General, Patience Oniha, the borrowing proposal sent to the National Assembly by President Bola Ahmed Tinubu is a calculated fiscal intervention to maintain market confidence, improve foreign reserves, and stabilise the exchange rate amid a delicate global economic environment.
Breakdown of FG’s $2.35bn External Borrowing Plan
In her explanation, Oniha noted that the borrowing package comprises two major components: $1.229 billion (₦1.843 trillion at ₦1,500/$) in new external loans to partly finance the 2025 Appropriation Act, and $1.118 billion set aside for the redemption of Eurobonds issued in 2018 that are due for maturity in November 2025.
“Yes, it’s two components,” Oniha confirmed.
“The 2025 budget includes new ₦1.8 trillion in external borrowing—about $1.2 billion.
Then there’s $1.118 billion to refinance the maturing Eurobond by the end of November. So we’re issuing a fresh Eurobond to redeem that one.”
The FG’s $2.35bn external borrowing plan, she explained, follows global best practices in sovereign debt management.
Several African nations, including Kenya, Cameroon, Gabon, and Angola, have recently undertaken similar refinancing exercises to sustain fiscal liquidity and avoid repayment stress.
“It happens; it’s not unusual,” Oniha said. “We have disclosed it upfront. There’s no secrecy about the purpose or the process.”
A Strategic Mix of Refinancing and Budget Support
The DMO chief stressed that the federal government intends to raise the funds through any of several channels — including Eurobonds, syndicated loans, bridge financing, or concessional borrowing from multilateral institutions such as the World Bank and IMF.
She emphasised that while Nigeria has increasingly depended on the domestic market to finance its deficits in recent years, this was largely due to the post-COVID global liquidity crunch, which limited access to international markets.
“Before COVID, we maintained a 50-50 balance between domestic and external borrowing,” Oniha explained.
“But in 2020, the international markets were closed. If we didn’t have a local market to turn to, how would we fund the deficits?”
While reaffirming Nigeria’s commitment to concessional financing, Oniha said that multilateral and bilateral loans alone cannot meet the country’s budgetary funding needs.
“We’re taking all the concessional funds available, but they’re not enough. If you check our external debt profile, institutions like the World Bank and IMF still account for over 40 percent,” she said.
Economic Boost from Eurobond Issuance
Financial analysts have projected that the FG’s $2.35bn external borrowing plan, particularly the Eurobond component, could have a short-term stabilising effect on Nigeria’s foreign exchange market and external reserves.
Data from the Central Bank of Nigeria (CBN) shows that the naira has appreciated by 4.5 percent year-to-date, rising to ₦1,475.35 per dollar as of October 17, 2025, compared to ₦1,541.36 at the start of the year.
Similarly, external reserves have increased by $1.8 billion, reaching $42.68 billion in mid-October from $40.88 billion in January — a 4.4 percent rise.
According to Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co., the planned Eurobond issue will primarily serve to refinance maturing obligations and prevent sudden drawdowns on external reserves.
“This will help ease pressure on the naira and reassure investors about Nigeria’s commitment to timely debt servicing,” he noted.
In a similar analysis, Adebowale Funmi, Head of Research at Parthian Securities, said the inflow of foreign capital from the bond issuance could significantly improve foreign exchange liquidity.
“In the short term, this will support the naira and help the CBN manage volatility in the FX market. It also provides immediate fiscal relief by refinancing maturing Eurobonds and covering part of the 2025 budget deficit,” she said.
However, Funmi warned that while the plan may bring temporary fiscal stability, it also increases debt service obligations and exposure to exchange rate risks.
“The key challenge remains Nigeria’s low revenue base and vulnerability to external shocks,” she cautioned.
Long-Term Fiscal Strategy and Sustainability
Experts agree that while the FG’s $2.35bn external borrowing plan is prudent for short-term balance sheet management, its sustainability depends on robust revenue mobilisation and export diversification.
The DMO has repeatedly urged for reforms to improve Nigeria’s tax collection, boost non-oil exports, and enhance transparency in debt utilisation.
The Director-General affirmed that the government will continue engaging international investors to ensure optimal pricing and favourable repayment structures.
“We will approach the market when conditions are right, guided by our financial advisers. Our goal is to strike the right balance between cost, risk, and sustainability,” Oniha said.
Analysts Call for Structural Fiscal Reforms
While welcoming the clarity provided by the DMO, financial observers have stressed that Nigeria must adopt a more strategic debt management approach.
The focus, they argue, should shift toward productive borrowing that directly supports growth-oriented sectors such as energy, agriculture, and manufacturing.
“The Eurobond refinancing is necessary,” said economist Tunde Abdulahi, “but the broader issue remains — how we use the borrowed funds.
If these loans are channelled into infrastructure, power, and industrial projects that generate revenue, then the debt will be self-liquidating and sustainable.”
The DMO, for its part, insists that transparency and accountability remain central to its operations, with detailed public disclosures on debt structure, repayments, and utilisation.
As Nigeria prepares to tap the international capital markets later this year, market watchers anticipate renewed investor interest, driven by improved macroeconomic indicators and policy reforms under the Tinubu administration.
For now, the FG’s $2.35bn external borrowing plan represents both a test and an opportunity — a balancing act between maintaining fiscal discipline and ensuring the liquidity needed to sustain economic growth.
