Tinubu Seeks Senate Approval to Raise $2 Billion in Domestic Debt Market Under Foreign Currency Issuance Program

From Lateef Taiwo

President Bola Tinubu has formally written to the National Assembly seeking its approval for the federal government to raise up to $2 billion in the domestic debt market through the establishment of a foreign currency-denominated issuance program.

The request, submitted in line with Section 44 (1)(2) of the Fiscal Responsibility Act, 2007, and the Presidential Executive Order No. 16 of 2023 dated October 19, 2023, aims to enable the implementation of a local issuance program for foreign currency-denominated financial instruments.

According to the President’s letter, read on the Senate floor on Tuesday, the funds raised will be ring-fenced and invested in critical sectors of the economy. These sectors will be identified based on their potential to accelerate economic growth, drive infrastructure development, enhance foreign exchange earnings, create employment, and provide returns on investment. Recommendations for sectoral investment will be made by the Minister of Finance and Coordinating Minister of the Economy, subject to presidential approval and appropriation by the National Assembly.

“This is a viable fiscal strategy with the potential to boost Nigeria’s external reserves and promote exchange rate stability,” President Tinubu stated in the letter. “It will diversify the federal government’s sources of funding, deepen the investor base for FGN securities, and expand the range of products in the domestic financial market.”

The President noted that while the proposed capital raising would increase the public debt stock and debt servicing costs, the program would provide opportunities for investors to earn returns on their U.S. dollar holdings while supporting productive investments in the Nigerian economy.

The request has been referred to the Senate Committee on Local and Foreign Debts, with the Senate directing the committee to report back within two weeks.

The Debt Management Office (DMO) is expected to oversee the issuance, subject to the legislative approval and in accordance with the terms outlined in the executive order.