By Ayo Kehinde
The International Monetary Fund (IMF) has expressed concerns over Nigeria’s proposed $5 billion borrowing arrangement with First Abu Dhabi Bank, warning that the financing structure could expose the country to fiscal risks due to limited transparency.
Speaking after the IMF’s latest Article IV consultation with Nigeria, the Fund’s mission chief, Christian Ebeke, cautioned against the use of complex financing instruments such as Total Return Swaps (TRS), which are often difficult to scrutinise and assess.
“Our view is that transactions in these types of structures carry risks. Usually they are opaque, so the terms are not always very transparent when we review these instruments across countries”, Ebeke told reporters.
Nigeria’s Senate approved the borrowing plan in April. The Federal Government intends to deploy the funds to refinance expensive existing debt obligations and support critical infrastructure projects.
Similar financing arrangements have been adopted by several African countries, including Senegal and Angola, as governments seek alternative sources of funding amid tighter global financial conditions.
However, the IMF urged Nigeria to explore more transparent financing options, including Eurobond issuances and concessional loans, arguing that such instruments would improve investor confidence and reduce long-term fiscal vulnerabilities.
The warning came alongside a generally positive assessment of Nigeria’s economic reform programme under President Bola Tinubu. The IMF noted that reforms introduced since 2023 including the removal of fuel subsidies, exchange rate liberalisation and tighter monetary policy have strengthened macroeconomic stability, improved external buffers and enhanced policy credibility.
According to the Fund, Nigeria’s foreign reserves have risen to about $50 billion, their highest level in 17 years, while foreign exchange market reforms have helped restore investor confidence and attract capital inflows.
Despite these gains, the IMF warned that economic improvements have yet to significantly ease hardship for many Nigerians. Poverty levels remain elevated, while food insecurity continues to affect millions across the country. The Fund also highlighted risks stemming from volatile portfolio inflows and potential global shocks, including rising energy prices linked to geopolitical tensions.
In response, the Federal Government defended its economic strategy, with officials describing the IMF’s assessment as further validation of the Tinubu administration’s reform agenda and efforts to strengthen economic resilience.
