The International Monetary Fund (IMF) has expressed concern over the Nigerian government’s plan to secure a $5 billion loan from the First Abu Dhabi Bank in the United Arab Emirates, warning that the arrangement could expose the country to serious financial risks.
The caution was raised on Tuesday by the IMF’s Resident Representative in Nigeria, Christian Ebeke, during the presentation of the Fund’s 2026 Article IV Consultation Report on Nigeria.
According to the IMF, the proposed funding structure, known as a Total Return Swap (TRS), lacks sufficient transparency and may create financial obligations that are difficult to predict or manage.
Ebeke explained that similar arrangements used in different countries often come with hidden risks because the details are not always fully disclosed or clearly understood.
He noted that governments involved in such deals can face unexpected costs if market conditions change, especially when asset values fall or exchange rates move against expectations.
“The concern is that these kinds of transactions are usually not very transparent. Across several countries where we have reviewed similar instruments, there are often risks that are not immediately obvious,” Ebeke said.
He further explained that a decline in the value of the underlying assets or a weakening local currency could trigger additional financial demands on the borrowing country.
“One of the major issues is the possibility of margin calls. If the asset backing the transaction loses value or the currency depreciates significantly, the country may be required to provide additional resources,” he added.
Although the IMF said it does not yet have complete details about Nigeria’s specific agreement, the organisation maintained that the structure should be approached with caution.
“At this stage, we do not have further information on the transaction itself, but our position remains that it carries notable risks and those risks should be carefully monitored,” Ebeke stated.
Nigeria’s Senate approved the borrowing arrangement in April 2026, joining other African countries such as Senegal and Angola that have previously adopted similar financing models.
The IMF’s warning comes as discussions continue over Nigeria’s growing debt profile and the need for sustainable financing options to support economic development.