The International Monetary Fund (IMF) has cautioned Nigeria over its proposed $5 billion Total Return Swap arrangement with First Abu Dhabi Bank, warning that the structure could expose the country to hidden costs and financial risks, even as the government looks to alternative funding channels amid elevated global borrowing costs.
Christian Ebeke, the IMF’s resident representative in Nigeria, raised concerns about the structure of the transaction, noting that Nigeria still had access to conventional financing options that could prove more transparent and potentially less risky.
Fielding questions on Tuesday during a press briefing on Nigeria’s 2026 Article IV consultation, Ebeke warned against underestimating the risks embedded in derivative-based funding arrangements such as the proposed swap.
His words, “On the TRS, Nigeria has market access. It carries risks and it is important to consider that. There are options for Nigeria. Nigeria can issue Eurobonds and indeed borrow from multilaterals institutions on concessional terms. Nigeria can take advantage of those options for its deficit funding.”
The remarks come as the federal government moves to raise up to $5 billion through a Total Return Swap with First Abu Dhabi Bank, a structure that allows the government to receive upfront funding backed by naira-denominated securities while the lender takes exposure to the returns on the underlying assets.
