The International Monetary Fund (IMF) has expressed concern over Nigeria’s proposed plan to raise up to $5 billion in external financing through a derivatives-based arrangement with First Abu Dhabi Bank in the United Arab Emirates.
The warning was issued by the IMF’s resident representative in Nigeria, Christian Ebeke, who told journalists that such financial structures are often complex and may lack sufficient transparency regarding their terms and obligations.
According to him, similar arrangements in other countries have previously raised concerns due to limited disclosure, making it difficult to fully assess the risks and repayment implications involved.
The IMF advised that Nigeria consider more conventional funding options such as Eurobonds or concessional loans, which typically offer clearer terms and lower risk exposure for sovereign borrowers.
The development comes as Nigeria continues to rely on external borrowing to finance budgetary needs and infrastructure projects. Earlier in March, the National Assembly approved President Bola Tinubu’s request for $6 billion in external loans.
As part of the approval, the government also secured backing for a structured Total Return Swap arrangement of up to $5 billion with First Abu Dhabi Bank.
Officials of the federal government have maintained that the funds will be used to support budget implementation, infrastructure development, and refinancing of more expensive domestic and external debts.
However, the IMF’s comments add to growing global scrutiny of complex sovereign financing arrangements, particularly those involving derivative instruments that may obscure the true cost of borrowing.
Nigeria’s public debt currently stands at about $110.3 billion, raising continued concerns about debt sustainability amid rising external financing commitments.
