EXTERNAL BORROWING GUIDELINES
Guideline · Finance
Guidelines govern the conditions and approvals for external loans by federal or state governments. They target federal agencies, state governments, the Debt Management Office, and lenders. This keeps borrowing sustainable and aligned with development priorities.
EXTERNAL BORROWING GUIDELINES
What Is This Policy?
Administrative guidelines governing the conditions, processes, and approvals required before the Federal or State Government may contract external loans from bilateral or multilateral lenders.
Who Does It Target?
Federal MDAs seeking external financing State governments seeking FGN guarantee for external loans The Debt Management Office (DMO) Multilateral lenders (World Bank, AfDB) and bilateral creditors
What Does It Aim to Achieve?
Ensure all external borrowing is within sustainable debt limits, serves development priorities, is contracted on competitive terms, and is properly documented and reported.
Key Features
Approval Process: External loans require DMO review, Federal Executive Council approval, and National Assembly ratification for significant amounts. Eligibility Criteria: Loans must be for capital projects with clear development impact, and meet minimum grant element thresholds. Currency and Rate Limits: Guidelines specify acceptable currencies and maximum interest rates for sovereign borrowing. State Guarantees: State government external loans require Federal Government guarantee and must go through DMO.
Current Status
Rollout Stage: Active Coverage: Federal and state government external borrowing Beneficiaries: Nigerian public through responsible debt management Funding: Not applicable — regulatory framework
How to Access
Submit external loan proposal to DMO for assessment Projects must be in the approved capital budget Loan terms must be assessed by DMO before approval is granted Application method: Submit proposals to DMO at https://www.dmo.gov.ng
Important Terms
External borrowing without FEC and NASS approval is unconstitutional State external loans require Federal Government guarantee DMO publishes quarterly external debt reports publicly
Official Resources
Website: https://www.dmo.gov.ng Contact: Debt Management Office (DMO)
Legal Framework
Issued under the authority of the Debt Management Office (Establishment, etc.) Act and the Fiscal Responsibility Act 2007, which mandate the DMO to set guidelines for external borrowing. Operates alongside the External Loans Act, the CBN Act 2007 (on foreign exchange management), and the Finance Acts. Aligns with IMF Article IV consultation standards, World Bank Debt Management Performance Assessment (DeMPA) framework, and the G20 Common Framework for Debt Treatments.