President Bola Tinubu has requested the Senate’s approval for the issuance of a N757 billion Federal Government bond to settle outstanding pension liabilities accrued as of Dec. 2023.
Freedomonline reports that Tinubu made the request in a letter addressed to the President of the Senate, Godswill Akpabio, which was read at plenary on Tuesday.
In the letter, the president stated: “I write to request the approval of the National Assembly for the issuance of a Federal Government of Nigeria bond in the domestic debt market by the Debt Management Office (DMO).”
The bond is intended to settle pension liabilities under the Contributory Pension Scheme (CPS) as of Dec. 2023.
Tinubu explained that the Pension Reform Act 2014 mandated setting aside five per cent of the nation’s monthly wage bill to clear past pension liabilities before the commencement of the CPS.
“However, due to revenue challenges, Nigeria has struggled to comply fully with this provision, leading to an accumulation of pension arrears.
“To address this, the government has decided to raise funds by issuing the bond in the domestic debt market.
“The Federal Executive Council approved the bond issuance during its meeting on Feb. 4.”
The president said the request aligned with Section 44(1)(2) of the Fiscal Responsibility Act 2007, which required National Assembly approval for all new federal government borrowings.
He described the proposed bond as a vital investment in human capital development.
“It will enable the federal government to meet its obligations under the CPS, restore confidence in the pension industry, and improve retirees’ welfare,” Tinubu said.
He added that settling pension arrears would help retirees meet basic needs such as medication, rent, school fees, and other family expenses, thereby improving their health and reducing premature deaths.
The president also noted that clearing pension liabilities would boost productivity, improve morale among public servants, and demonstrate the government’s commitment to fulfilling pension obligations.
Furthermore, Tinubu said the settlement could stimulate aggregate demand, spur economic growth, and enhance liquidity in the economy.
He acknowledged, however, that the bond issuance would increase Nigeria’s public debt stock and raise debt servicing costs.
