The International Monetary Fund (IMF) has expressed concern over Nigeria’s 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, warning that such structures are often opaque and difficult to assess.
The IMF’s resident representative in Nigeria, Christian Ebeke, raised the concern while speaking to journalists, noting that similar financial instruments used in other countries have attracted scrutiny due to limited disclosure and unclear repayment terms.
“Our view is that the transaction in these types of structures carry risks. Usually they are opaque, so the terms are not always very transparent when we reviewed these instruments across countries,” Ebeke said.
He advised that Nigeria should instead consider more traditional funding sources such as Eurobonds or concessional loans, which he said provide clearer terms and reduce risk exposure for sovereign borrowers.
The development comes as Nigeria continues to expand external borrowing to finance budgetary needs and infrastructure projects. On March 31, the National Assembly approved President Bola Tinubu’s request for $6 billion in external loans, including a proposed structured Total Return Swap arrangement of up to $5 billion with First Abu Dhabi Bank.
The federal government has maintained that the planned funds are intended to support budget implementation, infrastructure development, and refinancing of more expensive domestic and external debts.
However, the IMF’s warning adds to growing international concern over the use of complex sovereign financing tools, particularly derivatives-based arrangements that can obscure the full cost of borrowing and long-term obligations.
Nigeria’s public debt currently stands at about $110.3 billion (approximately N159.2 trillion as of December 2025), underscoring rising concerns over debt sustainability as new borrowing plans continue to expand.
