President Bola Tinubu has 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 programme.
The request, submitted in line with Section 44 (1) and (2) of the Fiscal Responsibility Act, 2007, and Presidential Executive Order No. 16 of 2023 dated October 19, 2023, aims to facilitate the implementation of a local issuance programme for foreign currency-denominated financial instruments.
According to the President's letter which was read on the Senate floor on Tuesday by Senate President Godswill Akpabio, the funds raised will be ring-fenced and invested in critical sectors of the economy.
He explained that these sectors will be selected based on their potential to accelerate economic growth, drive infrastructure development, enhance foreign exchange earnings, create employment, and provide returns on investment.
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The President further stated that 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 acknowledged that while the proposed capital raising would increase the public debt stock and debt servicing costs, adding that it would also 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) was expected to oversee the issuance, subject to legislative approval and in accordance with the terms outlined in the executive order.
