DMO explains FG’s $2.35bn external borrowing plan
…Eurobond issue seen boosting naira, external reserves
Patience Oniha, director-general of the Debt Management Office (DMO), says the federal government’s proposed $2.35 billion external borrowing plan is a strategic mix of new financing for the 2025 budget and a proactive measure to refinance maturing Eurobonds.
The breakdown of the request, which was sent by President Bola Tinubu to the National Assembly, includes $1.229 billion (N1.843 trillion at the ₦1,500/$ exchange rate) in new external loans to part-finance the 2025 Appropriation Act, and $1.118 billion to redeem Eurobonds issued in 2018, which are due in November 2025.
“Yes, it’s two components,” Oniha told BusinessDay. “The 2025 budget has new N1.8 trillion in new external borrowing. That’s $1.2 billion. Then there’s $1.118 billion, maturing by end of November. So we want to issue Eurobond to redeem that one.”
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She explained that refinancing maturing Eurobonds through fresh borrowing is standard practice in international debt markets and helps Nigeria avoid default while maintaining investor confidence.
“It happens, it’s not unusual,” she said. “These countries who have done it include: Kenya – $1.5bn in Feb 2024 to refinance a $2 billion, Cameroon – $550 million in July 2024, Gabon – $570 million in Feb 2025, Angola – $1.75 billion in Oct 2025. And we have disclosed that upfront. There’s no hiding it.”
President Tinubu has said the funds will be accessed through any of several instruments in the international capital market — Eurobonds, syndicated loans, bridge financing, or direct borrowing from multilateral lenders.
In recent years, the federal government has relied more heavily on the domestic market to fund budget deficits, raising concerns over crowding out private sector investment and higher local borrowing costs. Oniha attributed this trend to global market conditions following the COVID-19 pandemic.
“That was before COVID,” she said. “We were doing 50-50 before… But in 2020, the international markets were closed. If you didn’t have a local market to borrow from, how would you fund your deficits?”
While acknowledging the need to manage domestic debt pressures, she dismissed the notion that Nigeria was turning away from concessional financing.
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“We’re taking all the concessional [funds], but it’s not enough. So, we have to take the commercial,” Oniha said. “If you check our external debt stock, you’ll see the World Bank, IMF, and others — they still account for over 40 percent.”
Eurobond impact
The already stabilising naira is projected to strengthen further, while Nigeria’s external reserves are expected to receive a significant boost following the government’s planned issuance of $2.3 billion Eurobond towards the end of the year.
Year-to-date, the naira has appreciated by 4.5 percent, rising to N1,475.35 per dollar as of Friday, October 17, 2025, compared to N1,541.36 quoted at the beginning of the year at the Nigerian Foreign Exchange Market (NFEM), according to data from the Central Bank of Nigeria (CBN).
Similarly, Nigeria’s external reserves have grown by $1.80 billion within the same period, representing a 4.4 percent increase to $42.68 billion on October 16, 2025, from $40.88 billion recorded at the start of the year.
Commenting on the development, Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co., noted that the planned Eurobond issuance is largely to refinance maturing obligations. According to him, the issue will help moderate the impact of the due Eurobonds on external reserves and ease concerns over exchange rate stability.
Similarly, Adebowale Funmi, head of Research at Parthian Securities, said the federal government’s plan to issue a $2.3 billion Eurobond in November will have mixed implications for the Nigerian economy. In the short term, she explained, the inflow of funds is expected to boost Nigeria’s external reserves and support the naira by improving foreign exchange liquidity, which could help the CBN manage volatility in the FX market and stabilise the exchange rate. On the fiscal side, the proceeds will help finance part of the 2025 budget deficit and refinance maturing external debt obligations, thereby reducing immediate repayment pressure on government finances. It may also ease the need for heavy domestic borrowing, potentially moderating yields in the local bond market.
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However, Funmi cautioned that the issuance would also add to Nigeria’s external debt stock and debt service obligations, increasing exposure to exchange rate risks. While a successful issuance could signal investor confidence and attract additional portfolio inflows, the growing reliance on Eurobonds for fiscal and debt management, she said, highlights Nigeria’s vulnerability to external shocks and its weak revenue base. In summary, she observed that the Eurobond will provide short-term fiscal and external liquidity relief but underscores the urgent need for stronger revenue mobilisation and fiscal reforms to ensure long-term debt sustainability.
Looking ahead, Abdullahi said, “We expect to approach the international capital market later this year, subject to market conditions and transaction adviser guidance. We’ll continue engaging investors to ensure the structure works well for both sides in terms of pricing and liability management.”
