The International Monetary Fund (IMF) on Tuesday cautioned Nigeria over its plan to borrow up to $5 billion through a derivatives agreement with First Abu Dhabi Bank of the United Arab Emirates (UAE).
According to Reuters, the IMF resident representative in Nigeria, Christian Ebeke, while speaking to reporters in Abuja warned that such transactions are often opaque and complex.
“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,” he said.
According to Ebeke, the federal government could consider issuing Eurobonds or exploring other financing sources, including concessional loans, to fund its deficits.
The national assembly on March 31 approved President Bola Tinubu’s $6 billion external borrowing request.
Tinubu asked the national assembly to approve two separate loans from the United Arab Emirates and the United Kingdom.
In one of the letters read during plenary, the president sought approval for a structured total return swap (TRS) external financing programme of up to $5 billion from First Abu Dhabi Bank.
He said the proposed borrowing would increase the country’s public debt stock, which currently stands at $110.3 billion, equivalent to about N159.2 trillion as of December 31, 2025.
Tinubu said the proceeds would be used for budget implementation, development of priority infrastructure projects, and repayment of relatively expensive domestic and external debts.