IMF cautions Nigeria over planned $5bn borrowing deal with UAE bank

THE International Monetary Fund (IMF) has raised concerns about Nigeria’s plan to secure as much as $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank in the United Arab Emirates (UAE), warning that such structures come with significant risks.

Speaking to journalists on Tuesday, the IMF’s Resident Representative in Nigeria, Mr Christian Ebeke, said the proposed transaction falls into a category of financing instruments that are often difficult to scrutinise due to their complexity and limited transparency, according to Reuters.

“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.

The IMF official advised Nigeria to consider alternative funding channels, including Eurobond issuances and concessional financing, as options for covering fiscal deficits.

The warning comes months after the National Assembly approved President Bola Tinubu’s request to obtain $6 billion in external loans. The borrowing plan included separate financing arrangements from the UAE and the United Kingdom.

In a letter presented during plenary, Tinubu sought legislative approval for a structured total return swap (TRS) external financing programme valued at up to $5 billion, with First Abu Dhabi Bank identified as the lender.

The president acknowledged that the facility would add to Nigeria’s debt burden, which stood at $110.3 billion, equivalent to about N159.2 trillion, as of December 31, 2025.

According to Tinubu, the funds are expected to support implementation of the national budget, finance critical infrastructure projects and help refinance existing domestic and external obligations carrying higher borrowing costs. :::